Indian stock market finished with heavy losses on Friday while the rupee also suffered a big loss against the US dollar. With the benchmark BSE Sensex, it nosedived over 750 points amid weak domestic and global cues.
Sensex plunged 770 points or 2.06 percent to close at 36,563, wiping out Rs 2.6 lakh crore of investors’ wealth, in the first trading session of this week. It was also the worst fall of 2019 for the index in percentage terms.
This came after data released last week showed GDP grew at its weakest pace in over six years as consumption demand weakened.
Major laggards on the BSE index include ICICI Bank, Tata Steel, Tata Motors, IndusInd Bank, Reliance Industries and HDFC with their stock falling as much as 4.58 percent.
28 out of 30 stocks finished in red on the Sensex pack. On NSE, all the sub-indices finished in red with Nifty PSU Bank and Metal sliding as much as 4.87 percent.
Among auto stocks, Tata Motors, Bosch, Motherson Sumi, and Eicher Motors fell between 3% and 4% after top automakers reported a slump in August sales over the weekend. Another market heavyweight Reliance Industries fell over 3%.
Shares of ONGC fell 3% today after a fire broke out in a stormwater drainage network at the company’s oil and gas processing plant in Uran, Navi Mumbai.
Asian markets ended mixed today while European equity markets struggled as investors waited to see if Chinese and American officials can schedule a planned meeting this month to continue trade talks.
Indian markets continue to be hurt by selling pressure from foreign investors, which sold a net $2.3 billion worth of Indian stocks last month.
Here are some reasons behind the decline.
US-China trade war
On the global front, the United States began imposing 15 percent tariffs on a variety of Chinese goods on Sunday and China began imposing new duties on US crude oil, the latest escalation in their trade war.
PSB stocks down
Public sector bank stocks tumbled after the government announced a merger of 10 state-run lenders into four. The mergers announced on Friday, together with two set consolidations done last year, will reduce the number of state-owned banks to 12 from 27 in 2017. Some of the PSB stocks tanked around 10 percent during the day.
A slump in the auto sector
The auto sector witnessed a double-digit sales decline in August as it continued to reel under one of the worst slowdowns in its history.
The steep decline in sales to dealers is worrying industry executives who are renewing calls for a tax cut on cars, two-wheelers, and trucks while auto analysts are cutting their sales forecasts for the year.
Weak macroeconomic data
Growth of eight core industries dropped to 2.1 percent in July, mainly due to contraction in coal, crude oil, and natural gas production, according to government data released on Monday
The GDP data also showed deceleration with the growth rate coming down to over six-year low of 5 percent in the first quarter of the current fiscal, mainly on account of a sharp dip in the manufacturing sector, which registered almost a flat growth of 0.6 percent.
