The BSE Sensex slumped over 500 points on Monday following a 7 per cent fall in Chinese equities that prompted exchanges in China to halt trading. Sensex crashed below 26,000-level by falling 537.55 points to 25,623.35, while Nifty50 tanked 171.90 pts to settle at 7,791.30.
Below are the reasons why Sensex fell over 500 points today:
1. Chinese stock markets tumbled 7 per cent in their opening session of 2016 on Monday as weak factory activity surveys and falls in the yuan added to concerns about the struggling economy, forcing exchanges to suspend trade for the first time. The drop in the CSI300 index, which covers both bourses, for the first time triggered an automatic early closure under the new system, after an initial 15-minute trading halt failed to stem the declines.
2. Global markets: European, Asian shares and currencies tumbled on Monday on the first day of trading in 2016 after China factory activity contracted and its central bank guided the yuan lower, while oil prices jumped as much as 3 percent on rising tensions in the Middle East.
3. In the first contraction in over two years, manufacturing sector output dipped in December to a 28-month low as new orders fell sharply and production took a big hit from heavy rains in Chennai, putting pressure on RBI to keep rates low.
4. Major losers that dragged down the Sensex and Nifty were Tata Motors, Bharti Airtel, Adani Ports, HDFC Ltgd, BHEL, Lupin, ICICI Bank, SBI, RIL, Sun Pharma,Axis Bank, GAIL, Cipla, Hero MotoCorp, L&T, Coal India, M&M, Infosys and TCS.
5. Depreciation in Indian rupee also dampened the market sentiments. The rupee was at 61.52 per dollar at the time of equity markets closing as compared to 61.15 per dollar level on Friday.