Sensex slides

A host of negative global cues, ranging from a brewing crisis in Russia to lower-than-expected Chinese manufacturing data and falling crude prices, led to market turmoil around the world that also affected sentiment on Dalal Street. As a result, the sensex fell below the crucial 27,000-mark for the first time in nearly two months and closed at 26,781 — down 538 points. The nifty fell below 8,100, closing 152 points lower at 8,068. The day’s session left investors poorer by Rs 2 lakh crore with BSE’s market capitalization now at Rs 94.4 lakh crore.
Fears that a choppy global market may limit RBI’s powers to cut interest rates early next year also unnerved investors. The weakness in the equity market also raised fears of an FII withdrawal. This, in turn, pulled the rupee to a 13-monthlow level of 63.70 to a dollar in mid-session before it closed at 63.54, down 59 paise on the day.
Bond markets, too, showed weakness with the benchmark 10-year yield spiking to 7.99% from 7.82% on Monday as bond prices fell. End of the session data on the stock exchanges showed that FIIs were net sellers at Rs 1,247 crore in the secondary market.
The day’s initial slide in the stock market came on the back of data released by global financial services major HSBC that showed Chinese manufacturing PMI, a measure of robustness of the manufacturing sector, was at 49.5 against an estimate of 49.8, indicating contraction for the sector. Any number below 50 indicates contraction.
Late in the session, it was the crisis in Russia that pulled the sensex deep in the red. Early on Tuesday, the Russian central bank raised interest rates from 10.5% to 17%, but even such a steep hike failed to arrest the slide of the ruble. As a result the RTSI index, one of the two major indices of the country, plunged 12.3%, rekindling fears of a repeat of the crisis of 1998 that led to a global sell off. The volatility in market globally also raised doubts if India could cut interest rate as that could lead to outflow of foreign money from India. As a result of the across-the-board sell off, 27 of the 30 of sensex stocks closed in the red. Most IT stocks, however, closed with gains since a weaker rupee would mean higher export revenues for these companies.