- Market at 4-month closing low; Sensex plunges 555 pts, Nifty below 7,600
- BHEL, Tata Steel sink 7 percent each
BSE midcap index is down 2.6 percent while smallcap index falls 2.9 percent
Brent pares some losses; climbs back above $33 per barrel - Chinese markets halted for the second time this week, after 7 percent slump.
Domestic equity benchmarks on Thursday joined the global rout amid concerns that further devaluation of the Chinese yuan may have a contagion effect on emerging market currencies, triggering huge redemption pressure on EM funds.
China’s Forex Reserves Records Biggest Monthly Drop
China’s foreign exchange reserves, the world’s largest, fell $107.9 billion in December to $3.33 trillion, the biggest monthly drop on record, the central bank data showed on Thursday.
The December figure missed market expectations of $3.40 trillion, according to a Reuters poll. China’s foreign exchange reserves fell $512.66 billion in 2015, the biggest annual drop on record.
Europe Opens Sharply Lower
European shares fell sharply on Thursday after China accelerated the depreciation of the yuan, sending currencies across the region reeling and domestic stock markets tumbling.
The pan-European FTSEurofirst 300 index and the euro zone’s blue-chip Euro STOXX index both fell 2 percent. Germany’s DAX declined 1.4 percent, while Britain’s FTSE 100 weakened by 1.6 percent.
“The extent of the slowdown in China is certainly a worry. Investor sentiment is very fragile at the moment,” said Terry Torrison, managing director at Monaco-based McLaren Securities.
Oil Below $33/bbl
Oil slid below $33 a barrel on Thursday to levels not seen in more than a decade, as a tumble in Chinese equities rattled investors already concerned by near-record production and massive stockpiles of unwanted crude.
The price of oil has shed around 70 percent since the current downturn began in June 2014, causing pain to oil companies and governments that rely heavily on crude revenues.
Markets in Panic Mode
Sensex extended morning losses, sliding 500 points to below 25,000. Nifty broke below 7,600.
Tata Motors, BHEL, ONGC, HIndalco, Tata Steel and other heavyweight stocks fell 4-6 percent apiece.
Some analysts say China is likely to devalue the yuan by a further 3-4 per cent during calendar 2016, and that could have a negative impact on the global currencies, including rupee, according to an Economic Times report.
European equity futures fell sharply on Thursday after China accelerated the depreciation of the yuan, sending currencies across the region reeling and domestic stock markets tumbling.
Futures on the Euro STOXX 50, German DAX and French CAC indexes fell between 2.5-2.7 percent by 0702 GMT. Futures on Britain’s FTSE 100 fell 1.9 percent.
The S&P BSE Sensex plunged over 400 points in morning trade on Thursday, slipping below 25,000 for the first time since 8 September 2015, after trading in the Chinese markets halted for the second time this week following a 7 percent slump in the barometer CSI300.
The fall in the index was led by losses in ICICI Bank, Tata Motors, Infosys, Axis Bank, and Reliance Industries.
The Nifty came under pressure and broke below its crucial psychological support level of 7,650, weighed down by losses in realty, power, oil & gas, metal, consumer durable, and banking stocks.
The market breadth was extremely low with eight of every ten BSE stocks trading in the red. The broader market declined in-line with the benchmark indices with the BSE midcap and smallcap down 1.06 and 1.23 percent, respectively.
Shares of Vedanta cracked 5 percent while that of Tata Motors, Tata Steel and Adani Ports slipped 4 percent each. All major BSE sectoral indices traded in the red.
The rupee depreciated 4 paise to 66.86 against the US dollar in early trade on Thursday after the Chinese central bank, PBoC, set yuan midpoint to its weakest level since March 2011, sending Asian currencies tumbling.
PBOC fixed the official guidance rate 0.5 percent weaker than Wednesday’s fix of 6.5314, its biggest daily fall since last August. Chinese yuan dropped 0.39 percent to 6.58 against the greenback.
Most other Asian markets slumped in trade after equity market slump in China halted trading for the rest of the day. Japan’s Nikkei fell 1.78 percent while the South Korean Kospi was down 0.9 percent. Hong Kong’s Hang Seng traded lower by 2.44 percent.
Read more on the turmoil in the Chinese financial markets here.
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