Chances of Indian equity market bottoming out in the near future cannot be ruled out but danger of making fresh lows would continue to exist, says Sandip Shenoy of Pioneer investcorp. He believes structural bull trend is intact and capital flows will have to return to India since it is the only growth story around. The market has opened with a big gap down on carnage across the globe as investors worried over Chinese economic growth. The Sensex fell 883.55 points or 3.23 percent to 26482.52 and the Nifty dropped 244 points or 2.94 percent to 8055.95.
All Nifty stocks traded in red. Tata Motors, Axis Bank, Vedanta, GAIL, ICICI Bank, Yes Bank and Cairn India topped the selling list, down 5-7 percent. Not only frontline indices, but also broader markets saw panic selling. The BSE Midcap and Smallcap indices slipped over 3.5 percent. Vakrangee, SKS Microfinance, OCL India, IFCI and Gujarat Flourochem lost 8-14 percent. The Indian rupee has touched a fresh two-year low in early trade today following sharp sell-off in global markets as investors worldwide worried about Chinese economy. The currency has opened at 66.47 per dollar, the lowest level for the first time since September 2013, down 65 paise compared to 65.83 a dollar seen at Friday's close.
Agam Gupta, StanChart Bank feels the USD-INR will open higher in-line with other emerging market currencies. He expects the USD-INR to open at Rs 66.25-66.30/USD and trade in a Rs 66.10-66.60/USD range. "We will keep an eye on supply of USD from local government banks but the move in global markets will remain key for the pair at the moment," Gupta said. Major markets around the world suffered bruising losses as investors worldwide became increasingly concerned about Chinese economy.
All of the main US indices closed down more than 3 percent on Friday, the fourth consecutive day of falls. The Dow Jones Industrial Average closed down 531 points, or 3.1 percent, to 16,460 – the S&P 500 lost 3.2 percent to 1,971 and the Nasdaq closed down 3.5 percent at 4,706. In Asia, Shanghai crashed 8.5 percent as new data suggested that Chinese factory activity had slowed to levels last seen in 2009 and added to investors’ fears about the country’s economy since Beijing devalued its currency last week.
Hang Seng, Nikkei, Kospi, Taiwan Weighted and Straits Times plunged 3-5 percent. US oil prices also crashed down to below USD 40 a barrel a one point, a level not seen since the financial crisis. The dollar fell to a two-month low against the euro and added to speculation that the Federal Reserve may now not raise US interest rates next month, as had been widely expected by economists.
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