Equity markets on Tuesday, 3 September, plunged into massive losses. 30-share BSE Sensex lost 769.88 points to close at 36,562.91, while the broader 50-share NSE Nifty finished at 10,797.90, down 225.35 points.
Both the indices lost in excess of 2 percent.
All the sectoral sub-indices finished well in the red, however the sharpest dip came in the Nifty PSU Bank sub-index, which shed more than 5 percent during the day’s trade.
Tuesday was the first day of trading since the government announced multiple mergers of PSU banks on Friday. The loss in bank shares is thus an indicator of the markets being spooked by the announcement at least in the short-term.
Equity markets were closed on Monday on occasion of Ganesh Chaturthi.
According to traders, 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.
Growth of eight core industries also dropped to 2.1 per cent in July, mainly due to contraction in coal, crude oil and natural gas production, according to a government data released on Monday.
"GDP growth slowing down to 5 per cent is indeed worrying," said Deepthi Mathews, Economist at Geojit Financial Services, adding that the number shows that the economy has not still entered the recovery path.
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