Sensex Sinks 450 Points as China Crashes for 4th Day: 10 Developments

The BSE Sensex staged a smart recovery in the afternoon trade after falling nearly 450 points at its day’s low. A strong opening in European markets and buying at lower levels helped Indian markets recover from lower levels.

Indian stock markets started on a bright note on Tuesday, with the BSE Sensex climbing around 380 points in opening trade, but a sharp selloff in China shares triggered another round of panic selling in equities. Shanghai markets crashed nearly 8 per cent on Tuesday, ratting investors for the fourth straight day. The rupee also slipped in the red.

Here are the latest developments:

1) At their day’s low, the Sensex slumped nearly 450 points, while the Nifty hit 7,667 – their lowest levels in a year. The Sensex has now shed over 2,500 points or 9 per cent over the last four sessions. At 12:37 p.m., the Sensex was up 42 points at 25,783 while Nifty edged higher to 7,821.

2) The rupee slipped 12 paise to 66.76 per dollar after earlier pulling back to 66.39 against the greenback. A breach of 67 per dollar can accentuate the selloff in domestic stock markets, analysts said.

3) India’s volatility index, often called a fear gauge, was up 17 per cent today after earlier hitting its highest level since May 2014. The gauge surged 64.4 per cent on Monday.

4) Traders are concerned about the increasing momentum of selling by foreign investors, who own around 25 per cent of BSE 200 stocks. Over the last three sessions, foreign investors have sold shares worth nearly Rs 9,000 crore in the cash segment, leading to a slide in Sensex and Nifty.

5) Most traders are bearish on markets and have gone short, said CK Narayanan of Growth Avenues. Investors are also facing payment problems, which is creating down side pressure, he added.

6) Worries that the Chinese economy, the most important engine for the world economy, was growing at a much slower pace than Beijing’s 7 per cent target for 2015, has weighed on global stocks.

7) Analysts say Indian markets will continue to fall till the China situation stabilises. China stock markets opened 6 per cent lower on Tuesday, saw some recovery, but came under sharp selloff again. As of 12:01 p.m., both the Shanghai Composite index traded around 8 per cent lower. Tuesday’s losses come on the back of 15 per cent fall in the last three days.

8) Asian markets, which traded higher in morning tracking some recovery in China, fell sharply. Japan’s Nikkei index closed 4 per cent lower.

9) US stock futures traded 1 per cent higher, indicating some respite from selling on the Wall Street when it opens later in the day. Overnight, the Dow Jones Industrial Average briefly slumped more than 1,000 points – its most dramatic intraday trading range ever. It closed down 588.4 points, or 3.57 per cent, at 15,871.35.

10) Finance Minister Arun Jaitley briefed Prime Minister Narendra Modi on the selloff yesterday evening. Mr Jaitley said he wanted more steps to be taken to strengthen the Indian economy but cautioned that this could not be done in the next day or two.