Sensex on Wednesday plunged over 363 points, tracking global markets which kicked off the new year on a sluggish note due to China slowdown concerns and weak auto sales numbers. The rupee also crashed by 75 paise, its first loss in last four sessions, to close at 70.18 against the US dollar amid strengthening of the dollar and weak stock markets.
After plunging over 500 points in the early session, the Sensex pared some losses towards the fag-end and finished lower by 363.05 points, or 1 per cent, at 35,891.52. Similarly, the broader NSE Nifty plunged 117.60 points, or 1.08 per cent, to settle at 10,792.50.
According to analysts, disappointing Chinese economic data, weak auto sales numbers and a decline in GST collection triggered a sell-off in metal and auto stocks. After the New Year holiday, world stocks on Wednesday opened with an anxiety related to China slowdown, pulling most global bourses significantly down. In China, results of a private survey on China’s manufacturing for the month of December showed factory activity contracted for the first time in 19 months amid a trade dispute with the US. The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) for China fell to 49.7 in December from 50.2 in November.
The biggest losers in the Sensex pack — Vedanta, Tata Steel, M&M, Tata Motors, Maruti, Hero MotoCorp, PowerGrid, Bharti Airtel, SBI and Coal India — fell up to 4.48 per cent.
Sectorally, auto and metal indices took the worst hit, falling over 3 per cent. Auto stocks plunged on weak domestic passenger vehicle sales numbers, which continued to be in a slow lane in December with major players reporting either marginal increase or decline in offtake during the month on account of adverse macro-economic conditions.
Markets also turned cautious after the PMI data revealed that the country’s manufacturing sector activity in December slowed down from the previous month. The Nikkei India Manufacturing PMI eased to 53.2 in December, from 54, in November. Weak GST collections and concerns around fiscal budget targets also added to investor concerns.
Meanwhile, the domestic currency pared some losses and finally ended at 70.18 per dollar, down by 75 paise against its previous close. On Tuesday, the rupee had appreciated 34 paise to 69.43 against the American currency. Forex traders attributed the rupee fall to strong dollar against major global currencies overseas, fall in domestic equities and weak GST collections. The decline in crude oil prices, however, supported the rupee and capped the losses to some extent.
Vinod Nair, head of research, Geojit Financial Services, said, “Domestic market consolidated in expectation of weak Q3 results, while weak GST collection and lower auto numbers supported the fear. Globally, weak China factory data and risk of further slowdown in world economy impacted global market which was weak. Consolidation was broad in Indian market but metals and auto index were the worst performers.”
According to Abhijeet Dey, senior fund manager, BNP Paribas Mutual Fund, trading for the day began on a subdued note as the key benchmark indices drifted lower in early trade on negative Asian stocks.
“Indices continued to trade under pressure as the day progressed to finally close with losses of over one per cent. The negative sentiment further intensified after latest data showed that manufacturing activity slowed in December 2018,” he said.