Bear hug dragged down domestic equity markets for the fourth consecutive week and to their lowest levels in over a year on weak global cues coupled with China slowdown fear and continuous selling pressure by foreign institutional investors. Key benchmark indices plunged over 4 per cent during August 28 and September 4.
The BSE Sensex lost 1,190.48 points at 25,201.90 for the week ended September 4. NSE Nifty also dipped by 346.90 point at 7,655.05 during the same period.
All the sectoral indices on the Bombay Stock Exchange closed in red in the week gone by. The BSE Power index plunged the most — 7.15 per cent at 1,729.99, it was followed by the BSE Bankex (down 6.42 per cent), BSE Auto (down 5.67 per cent), BSE Capital Goods (down 5.47 per cent) and BSE Metal (3.85 per cent).
In the 30-share Sensex, BHEL, Mahindra & Mahindra, State Bank of India, Hindalco Industries and ICICI Bank declined 11.91 per cent, 9.78 per cent, 9.71 per cent, 9.66 per cent and 9.06 per cent at Rs 206.65, Rs 1,112.20, Rs 225.05, Rs 73.85 and Rs 257.85, respectively, during the week.
Sanjeev Zarbade, vice-president, private client group research, Kotak Securities, said, “In the recent weeks, global equities have been impacted by sudden devaluation of its currency by China and signals of an economic slowdown. So far as India is concerned, the delay in passing key reforms has also contributed to the disappointment among investors.”
Vivek Gupta, CMT, director research, CapitalVia Global Research, said, “Sharp fall in the domestic equity markets were triggered by selloff in global markets and slowdown in China’s economy. Market breadth indicating the overall health of the market was very weak. Broad based selling was seen across the board.”
This week, the Cabinet approved auctioning of marginal oil and gas fields having potential of Rs 70,000 crore which will not only reprieve the domestic oil rigs, pipes and ancillary industries but the policy decision will also save valuable foreign exchange outflows.
CBDT finally issued instructions not to open prior MAT cases settling the anxiety amongst foreign institutional investors. HDFC bank took the industry by surprise by reducing the base-lending rate by 0.35 per cent, paving the way for others to follow the suit and reduce cost of borrowing for the economy.
In the BSE 100 index, ICICI Bank, Mahindra & Mahindra, Power Grid Corporation of India, Punjab National Bank, Bank of India, The Federal Bank, Hindalco, Steel Authority of India, State Bank of India and ACC touched their new 52-week low during the week.
For the further movement of domestic benchmark indices, Vijay Singhania, founder, director, Trade Smart Online, said, “Globally, investors have turned nervous following the Shemitah, the last year of a seven-year cycle in the Jewish calendar. September 2015 being another Shemitah, which ends on September 13. Shemitah in the past has brought immense financial hardships to the world. Meanwhile, global investors are facing redemption pressure in a risk-off environment. Uncertainty over the US Fed rate hike is spooking global markets and the domestic markets no exception. Further downside in Nifty cannot be ruled out in case Fed hikes rates in September.”