India Business
Breaking News:
Hi there,
Login with your Facebook ID to see what your friends are reading on Times of India.
|
 |
SPOTLIGHT
6 reasons why Sensex, Nifty are sinking
NEW DELHI: The Sensex fell over 700 points and Nifty fell more than 2 per cent on Tuesday to near its lowest in about a year.
Here are the six reasons why markets took a hit today:
1. Lower-than-expected GDP data
One of the main reasons behind today's sharp fall in Sensex was the lower-than-expected GDP growth figure.
Data released by the Central Statistics Office ( CSO) on Monday showed the Indian economy grew by 7% in the June quarter, slower than the previous quarter's 7.5% expansion. Growth in the June quarter of 2014-15 was 6.7%.
While the 7% growth rate matches the June quarter growth of China and still places India in the league of fastest growing economies in the world, economists said more measures are needed to step up the acceleration.
2. Foreign investors sell record amount of Indian shares in August
Foreign investors sold a record amount of Indian shares in August, offloading even more than in the midst of the global financial crisis, as turbulent markets in China led many funds to reduce their holdings in riskier emerging markets.
Foreign institutional investors sold a net 168.77 billion rupees ($2.55 billion) in Indian shares in August, more than the previous monthly record of 153.47 billion rupees in October 2008, according to data from National Securities Depository Limited.
The sales helped push the Nifty down 6.6 per cent in August, its worst monthly performance since November 2011.
Analysts said the sales were largely a result of the overweight positions in India by foreign investors, who have been heavy buyers since 2012.
Foreign investors had been net buyers as early as July when India was seen as benefitting from outflows from China. They remain net buyers of 275.2 billion rupees this year.
3. Rate cut by HDFC
Banking and financial stocks led the decline after reports of HDFC Bank's steep base rate cut on Monday sparked fears that other lenders will be able to match it only at the cost of margins.
HDFC Bank cut its base rate by 35 basis points to 9.35 per cent from September 1 in a move to capture wider market share, according to media reports on Monday.
The move stoked fears that pricing pressure would lead to other banks taking a hit on their net interest margins as most banks would have a base rate of 35-65 basis points higher than that of HDFC Bank.
4. China slowdown
Asian stocks sank on Tuesday after more data showed weakness in China's economy, while gold and the yen advanced as investors fled to safer assets.
The Tokyo bourse, which shed almost 4 per cent, was the biggest loser in the region, providing a lead for the major European markets, which opened sharply down.
5. Uncertainty over US Fed rate hike
Uncertainty over interest rates in the United States was also unsettling traders ahead of a closely watched jobs report due later in the week.
A rate rise could further jolt global confidence, which has already been buffeted by a slowdown in China's economy that has also hammered the country's stock markets.
"Investors are concerned about the strength of the global economy, which is why you're seeing a sell-off in various stock markets," said Ayako Sera, a strategist at Sumitomo Mitsui Trust Bank Ltd in Tokyo.
6. Higher crude prices
A spike in crude oil prices on Monday led to selling pressure in stocks such as Reliance Industries, down 1.57 per cent, and Coal India, down 2.9 per cent.
(With inputs from agencies)
Here are the six reasons why markets took a hit today:
1. Lower-than-expected GDP data
Data released by the Central Statistics Office ( CSO) on Monday showed the Indian economy grew by 7% in the June quarter, slower than the previous quarter's 7.5% expansion. Growth in the June quarter of 2014-15 was 6.7%.
While the 7% growth rate matches the June quarter growth of China and still places India in the league of fastest growing economies in the world, economists said more measures are needed to step up the acceleration.
2. Foreign investors sell record amount of Indian shares in August
Foreign investors sold a record amount of Indian shares in August, offloading even more than in the midst of the global financial crisis, as turbulent markets in China led many funds to reduce their holdings in riskier emerging markets.
Foreign institutional investors sold a net 168.77 billion rupees ($2.55 billion) in Indian shares in August, more than the previous monthly record of 153.47 billion rupees in October 2008, according to data from National Securities Depository Limited.
The sales helped push the Nifty down 6.6 per cent in August, its worst monthly performance since November 2011.
Analysts said the sales were largely a result of the overweight positions in India by foreign investors, who have been heavy buyers since 2012.
Foreign investors had been net buyers as early as July when India was seen as benefitting from outflows from China. They remain net buyers of 275.2 billion rupees this year.
3. Rate cut by HDFC
Banking and financial stocks led the decline after reports of HDFC Bank's steep base rate cut on Monday sparked fears that other lenders will be able to match it only at the cost of margins.
HDFC Bank cut its base rate by 35 basis points to 9.35 per cent from September 1 in a move to capture wider market share, according to media reports on Monday.
The move stoked fears that pricing pressure would lead to other banks taking a hit on their net interest margins as most banks would have a base rate of 35-65 basis points higher than that of HDFC Bank.
4. China slowdown
Asian stocks sank on Tuesday after more data showed weakness in China's economy, while gold and the yen advanced as investors fled to safer assets.
The Tokyo bourse, which shed almost 4 per cent, was the biggest loser in the region, providing a lead for the major European markets, which opened sharply down.
5. Uncertainty over US Fed rate hike
Uncertainty over interest rates in the United States was also unsettling traders ahead of a closely watched jobs report due later in the week.
A rate rise could further jolt global confidence, which has already been buffeted by a slowdown in China's economy that has also hammered the country's stock markets.
"Investors are concerned about the strength of the global economy, which is why you're seeing a sell-off in various stock markets," said Ayako Sera, a strategist at Sumitomo Mitsui Trust Bank Ltd in Tokyo.
6. Higher crude prices
A spike in crude oil prices on Monday led to selling pressure in stocks such as Reliance Industries, down 1.57 per cent, and Coal India, down 2.9 per cent.
(With inputs from agencies)
From around the web
More from The Times of India
Recommended By Colombia
FEATURED ARTICLES
Recent Messages (75)