Stock markets across Asia and Europe buckled under selling pressure today as all the major indexes from Japan to Hong Kong to India closed the day deep in red. Key European markets also tumbled between 2.5 to 4% during early trade. India’s two important indexes, BSE Sensex and NSE Nifty, were down by 3.4% and 3.2% respectively at the time of close.
Concerns over weak growth prospects and health of banking sector, over supply of crude and prospect of a slowing of Chinese economy all contributed to this rout. The comments by Janet Yellen that the US Fed has not reversed its rate hike plan despite the risks to global economy further aggravated the situation and led to sharp decline in the markets.
While Sensex’s Bank Index was down by over 3.8% today, Small Cap index was down by close to 5%. The total loss to the banking stocks of BSE in the last 4 session this week stands at around 7%.
Except Cipla and Dr. Reddy’s all other 28 stocks of 30 share Sensex closed the day in red. All the sectoral indexes of BSE were down at the time of closing.
This week, BSE Sensex has already lost 5.5% of its market capitalisation in the first four trading sessions as it ended the day in red throughout the week. NSE Nifty also closed below 7,000 today, the lowest since May 2014.
Similar bearish sentiments had dominated the Asian markets today. Japan’s Nikkei closed down by 2.85% and Hong Kong’s Hang Seng ended the day down by 3.85%. The only exception was China’s Shanghai Composite Index that was down by just 0.6%.
Brokers said persistent selling by participants, tracking a weak trend at Asian markets where Hong Kong stocks plunged 5% during the intra day trade, a 3 year low, before closing the day down by 3.85%. This led to another sell-off across Asian markets and extending a global rout.
Furthermore, depreciating rupee against the dollar also negatively impacted sentiment, they said.
European markets were also trading in red in the early trade. Pan European STOXX 600 tumbled over 3.5% after the opening. While London’s FTSE and Germany’s DAX sank by around 2.5% in early trade. French CAC 40 was down by nearly 3.85% in early trade.
Worried over the volatility in Indian stock markets, policy makers in Delhi tried to assure the nervous investors.
Finance Ministry said the Indian economy is doing well and the performance of domestic stock markets is not as bad as that of other nations.
Attributing the plunge in the stock markets to global factors, Economic Affairs Secretary Shaktikanta Das said that government was prepared to deal with the challenges and stressed that 7.6 per cent GDP growth projected by the CSO for the current fiscal was ‘noteworthy and very significant’.
“Over the last few days the NSE and BSE have experienced a lot of volatility. The decline in our markets is comparable to rest of the world… India is not an exception, but it is better off than many other markets,” he said.
(With inputs from agencies)