Stock markets crash, rupee falters

Mumbai: Benchmark stock indices on Tuesday crashed over 2 per cent and the rupee tumbled 97 paise to a level not seen in over 9 months as unpleasant news continued to flow in for the Indian economy.

The BSE Sensex crashed about 770 points and the NSE Nifty dived over 225 points after investors indulged in panic selloffs as dismal GDP print, weak core sector growth and disappointing auto sale numbers pointed to deepening economic crisis in the country.

The benchmark indices also saw their biggest intra-day plunge in nearly 11 months. Massive selloffs in equities saw investor wealth eroding by Rs 2.55 lakh crore.

Indian markets, after an extended weekend, opened on Tuesday sharply lower reacting to country's worsening macro-economic situation as well as weak global cues attributed to long-lasting US-China trade tiff.

After plunging 867 points during the day, the 30-share index ended 769.88 points, or 2.06 per cent, lower at 36,562.91.

The broader Nifty too sank 225.35 points, or 2.04 per cent, to settle at 10,797.90. Top losers in the Sensex pack included ICICI Bank, Tata Steel, Vedanta, HDFC IndusInd Bank, Tata Motors, RIL and ONGC -- falling up to 4.45 per cent.

Only two IT stocks -- TechM, HCL Tech -- ended with mild gains, tracking weaker rupee. The Indian rupee plunged 97 paise to close at 72.39 per $ on Tuesday.

All sectoral indices ended in the red, with BSE metal, energy, consumer durables, telecom, bankex, finance, oil and gas, realty and capital goods indices settled 3.23 per cent lower.

Broader BSE midcap and smallcap indices too closed up to 1.65 per cent lower. "The sharp fall in the Q1 GDP growth to 5 per cent and the weak core sector growth are the key factors that have caused a fall in the markets as it opened after a long weekend.

The continuing negative global cues, the raging tariff war between the US and China, and the likely sluggishness in the economic fortunes of economies around the world have also been behind the rot in the markets here as well as elsewhere," said Joseph Thomas, Head of Research - Emkay Wealth Management.

Weak domestic consumption especially in rural areas has resulted mainly from low employment levels and non-availability of finance, which are issues that call for immediate measures to salvage the situation, Thomas said.

Public sector bank stocks also ended in significantly lower after the government announced the merger of 10 state-run lenders into four.

It gives a positive signal to investors that the government is not just focusing on recapitalising the bank, but also in improving the governance in the public sector banks, experts said.

However, the merger will still be painful as a result of the geographic and cultural diversity of the merging entities, they added.

Despite several efforts by the government to boost the economy, market sentiment took a hit on account of weak macroeconomic data releases and double-digit decline in auto sales in August as the sector continued to reel under one of the worst slowdowns in its history.

Official data released after market hours on Friday showed that India's GDP growth slipped to an over six-year low of 5 per cent in the June quarter of 2019-20, hit by a sharp deceleration in manufacturing output and subdued farm sector activity.

Additionally, the country's manufacturing sector activity declined to its 15-month low in August, owing to slower increases in sales, output and employment, the IHS Markit India Manufacturing Purchasing Managers' Index showed.