Mumbai/Nagpur: In a worst possible start to the trading session on the first day of the week, Indian stock markets joined the global equity rout as benchmark Sensex crashed over 1,000 points in the first few minutes of the start of the Monday trade on across-the-board selling pressure. The gloomy mood, which has been persisting over the past week on worries of the rapidly sliding Chinese economy, further got murkier after the world’s largest economy the US’ manufacturing sector slowed unexpectedly to its weakest pace in almost two years in August.
In response to the US markets slump on Friday, panic-stricken investors in Asia, including India, went on a rampage thereby pulling down the Sensex to a low of 26,359.53.
At 10.05 am, the 30-share S&P BSE Sensex was at 26,540.89, down 825.18 points or 3 percent from previous close. The broader 50-share CNX Nifty was quoted at 8,045.95, down 254 points, or 3.1 percent.
All the BSE sectoral indices were in the red, tumbling around 2-5 percent each.
The fall in rupee intensified further with the currency crossing past 66 to hit 66.49 against the dollar, its fresh two-year low.
Chinese markets, too, came under severe pounding with the Shanghai composite index tumbling 8 percent to 3,228.57 in early trading and Hong Kong’s Hang Seng index falling 4.2 percent to 21,475.15. Japan’s Nikkei 225 stock index dropped 2.7 percent to 18,918.42. Australia slid 2.5 percent to 5,084.30 and South Korea’s Kospi lost 0.5 percent.
“Signs that China’s economic slowdown is deepening and weak growth in Europe were impacting the global equities. But poor economic indicators from the US led to the US market also falling down badly on Friday. Growth in the US manufacturing sector slowed unexpectedly to its weakest pace in almost two years in August, according to Markit. The preliminary US Manufacturing PMI fell to 52.9 in August, its lowest since October 2013, from a final July reading of 53.8. This data further damaged the outlook for the global economy, sending stocks and commodity prices reeling which has erased more than $3.3 trillion from the value of global equities,” said G Chokkalingam, founder & managing director, Equinomics Research & Advisory.
Commodities markets, too, tumbled in Asia as fears spread that a more severe slowdown in China would pull down other economies in the region, denting energy and raw material consumption.
Crude prices crashed below $40 a barrel today, as apart from China fears a global oversupply also hit the sentiment.
Prices of copper, seen as a benchmark for industrial demand, were around the $5,000 a tonne on Monday morning, at levels similar during the peak crisis months of 2008-2009, and China’s iron ore index, despite a recovery recently also remains near record lows, trading around $55 a tonne, Reuters reported.
The rout in commodities market has also spread to sectors that have so far been performing well, the report said.