Sensex at 3-month low as China, US Fed spook markets

Indian stocks tumbled like nine pins on Thursday, with benchmark Sensex plunging over 439 points to close at a three-month low of 27,643.11 after a slew of global factors such as weak Chinese export data and Fed rate hike talks unnerved investors.

Besides, a caution ahead of retail inflation numbers -- to be released after market hours -- and key quarterly results also influenced trading sentiment in domestic markets. Shares of finance, telecom, banking, realty, utilities and industrials fell sharply due to heavy profit-booking.

The Sensex opened lower and stayed in the negative zone to hit a low of 27,563.84 points before settling at 439.23 points, or 1.56 per cent down at 27,643.11, its lowest closing since July 11.

The gauge had gained 21.20 points in the previous session on Monday. Stock exchanges remained closed on Tuesday and Wednesday for ‘Dussehra’ and ‘Moharum’, respectively.

On similar lines, the National Stock Exchange index Nifty broke below the 8,600-mark to touch the session's low of 8,541.35 and finally settled 135.45 points, or 1.56 per cent, down at 8,573.35.

Vinod Nair, head of research, Geojit BNP Paribas Financial Services Ltd, said, "Market was in an intense selling mode after two trading holidays tracking weak global markets which were impacted by poor Chinese trade data, fear of hike in US interest rate and Brexit worries. Domestically, investors are also cautious due to the unimpressive August IIP data and awaiting key Q2 results."

Trading, after a two-day holiday, resumed on a subdued note largely in tandem with a weak trend at rest of Asian markets after a below-forecast reading on Chinese data fanned fresh concerns about its economy and the Fed Reserve’s September meeting minutes boosted the case for higher US interest rates this year, according to brokers.

Market participants' outlook turned bearish on fears that an expected US rate hike could trigger outflows by foreign funds from emerging markets, they added.

The minutes of the September 20-21 meeting, at which the US central bank held rates steady, showed a greater probability of a rate hike in December. Several voting Federal Reserve policymakers judged a rate hike would be warranted "relatively soon" if the US economy continued to strengthen.

Adding to the global woes, China's September exports fell 10 per cent from a year earlier, far worse than expected, while imports unexpectedly shrank 1.9 per cent after picking up in August, suggesting signs of stability in the world's second-largest economy may be short-lived.

Cautious investors also focused on the September-quarter earnings season with Tata Consultancy Services, country's largest software exporter, reporting after market hours on Thursday.

Shares of TCS retreated 2.17 per cent, to Rs 2,328.50, but Infosys was up 2.19 per cent at Rs 1,052.05. The company is scheduled to announce its quarterly earnings on Friday.

In line with equities, the rupee also plummeted by 42 paise, its biggest fall in two weeks, to 66.95 against the dollar (intra-day) at the forex market, fuelling selling pressure in domestic stocks.

Adding to the weakened sentiment, the IIP data, released this Monday, showed industrial output in August remained in the negative zone -- the second month in a row, contracting by 0.7 per cent due to a slump in manufacturing, mining and capital goods segments.

Out of the 30-Sensex constituents 24 closed with losses, including Adani Ports, HDFC Ltd, ICICI Bank, RIL, Tata Motors, Bharti Airtel, SBI, Axis Bank, Lupin, Power Grid, Sun Pharma, Bajaj Auto, Hind Unilever, HDFC Bank and NTPC.

Foreign portfolio investors (FPIs) sold shares worth a net Rs 547.26 crore on Monday, showed provisional data.

Among sectoral indices, banking suffered the most by falling 2.19 per cent followed by realty 2.17 per cent, metal 1.91 per cent, consumer durables 1.88 per cent, power 1.85 per cent, healthcare 1.40 per cent and auto 1.31 per cent. While IT index rose 0.18 per cent.

The broader markets too remained under pressure, with the BSE mid-cap index slumping 1.50 per cent and the small-cap index lost 1.41 per cent.

Globally, Asian stocks tumbled for the day with benchmark indices in Hong Kong, Japan and Singapore falling by up to 1.61 per cent.

European markets were also in negative zone with key indices in France, Germany and the UK down by up to 1.14 per cent their in early trade.