India’s benchmark stock index slid to its lowest level since June 2014 on Thursday after a plunge in Chinese equities led to a trading halt for a second time this week, deepening a global rout. The Sensex tumbled 2.2% to breach the 25,000- point mark and ended the session at 24,851.83. The sentiment was weak in most of Asia, which caused the MSCI Asia Pacific Index to slip 2% while European shares fell the most since August after a 7 % slump in China’s CSI 300 Index led to trading being halted for rest of the day.
Foreign portfolio investors have sold Indian stocks worth $288 million in the last four sessions, after buying $3.3 billion of shares last year, the least in four years. The sell-off in equities hurt the rupee, which lost ground for the second straight day, falling 11 paise to close at a more than three-week low of 66.93 against the dollar on persistent demand for the American currency from banks and importers. The rupee has lost 33 paise, or 0.50%, in two days and plunged to 66.97 in intra-day trades.
On Thursday, the People’s Bank of China cut its yuan fixing by the most since August 13, a sign that the authorities are struggling to revive an economy that’s the world’s biggest user of energy, metals and grains. Contagion from China helped wipe $2.5 trillion off the value of global stocks in the first six days of this year.
Billionaire George Soros warned that markets are facing a crisis, and the World Bank cut its global growth forecasts for this year and next. Back home, investors are nervous ahead of an earnings season that is expected to see a modest performance from India Inc.
Kotak Institutional Equities (KIE) expects net income for the BSE-30 Index to grow by just 1.5% year-on-year. “We expect y-o-y decline in the net income of automobiles, cement, industrials, metals & mining, telecom and utilities sectors,” the brokerage wrote on Thursday. It expects the net income of the KIE universe to increase 4.2% y-o-y, led by sharp improvement in the profitability of oil marketing companies and Reliance Industries. “On an ex-energy basis, we expect net income to decline 4.5% y-o-y,” it said.
Maruti Suzuki India, the maker of half the cars sold in India, slid the most in four months amid concerns the rally in the yen to the strongest level since August will boost costs for the carmaker that buys components from its Japanese parent and pays royalty in the same currency.
Axis Bank led its peers lower, while Bharat Heavy Electricals plunged 7.2% to almost a two-year low. State Bank of India, the largest, tumbled to its lowest price since May 2014 while Oil and Natural Gas Corporation dropped the most since November 10.