Both the benchmark indices, the Sensex and the Nifty50, on Monday posted their biggest-single day losses in nearly six months as fears of an intensifying US-China trade war and tumbling rupee spooked the investor sentiment. While the Sensex shed 467.65 points, or 1.2%, to close the session at 37,922.17, the broader Nifty50 pared 151 points or 1.3% to end at 11,438.10 — its lowest level since March 16. The weak sentiment saw much of the market give up value as more than half of the companies with a market capitalisation of Rs 1,000 crore have lost over 10% of their value since January 1; investors have had very little to cheer. Of the 790 firms in this universe, 307 have lost over 20% of their value; about a third of the firms have lost more than 25%.
The Nifty MidCap Index has given up 9% since the start of the year, and 68% of its constituents have lost value. The Nifty Small Cap Index has suffered a bruising 18.3% since January, and 83% of its members have seen a fall in prices. The Bank Nifty hit its one-and-a-half month low of 27,201.75 on Monday as investors apprehend a rate hike by the Reserve Bank of India — in the wake of the weakening currency — could lead to a rise in bond yields and hurt the bond portfolios of banks.
Barring Axis Bank and Yes Bank, the shares of all banks ended in the red. A sell-off of stocks that had powered the rally triggered the recent fall in the benchmark indices. The stocks that have pulled down the Nifty50 are RIL, HDFC, HDFC Bank, Hindustan Unilever and Maruti Suzuki. These five companies have together contributed over half of the index’s fall of 300.40 points since its peak on August 28.
The overall breadth of the market was sharply negative on Monday, with 595 gainers against 1,161 decliners on the NSE. On the BSE, 1684 stocks ended in the red against 1,048 stocks closing higher. Of the 19 sectoral indices, all barring BSE IT posted losses on Monday with BSE Auto, BSE Metal and BSE Energy losing 1.7% each.
At 37,922.17, the Sensex trades at a price-earnings(PE) of 18.6 times to the estimated one-year forward earnings, a premium of 15% to the long-term average PE of 16.2 times. This compares with 8.7 times for Kospi and 13.8 for Jakarta Composite.
Brazilian Bovespa and the Shanghai Composite are trading at a price-earnings multiple of 10.1 and 9.8 respectively, data from Bloomberg shows Foreign portfolio investors sold shares worth $116.2 million on Monday, showed provisional data on the stock exchanges, taking their year-to-date sales tally in 2018 to $631 million. This compares with the domestic institutional investors’ (DIIs) buying of a whopping $10.4 billion so far this year.