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Sensex erases early gains, plunges 624 pts on dismal auto sales numbers

Investors also turned cautious in the absence of any significant fiscal stimulus from the government to arrest the economic slowdown besides the negative global cues

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Domestic equity markets went into a major tailspin towards the closing hours of the trading session on Tuesday, weighed down by dismal July passenger vehicle sales numbers that triggered wide-spread selling in automobile, telecom, IT and banking stocks. 

Continuing to flee the domestic equity markets, foreign institutional investors (FIIs) were at the forefront in leading the slump, offloading shares worth Rs 638 crore, according to BSE's provisional data. In the current month so far, FIIs have sold local shares to the tune of Rs 12,519 crore. 

Investors also turned cautious in the absence of any significant fiscal stimulus from the government to arrest the economic slowdown besides the negative global cues.

DOWNWARD SPIRAL

  • Investors also turned cautious in the absence of any significant fiscal stimulus from the government to arrest the economic slowdown besides the negative global cues.
     
  • FIIs offloaded shares worth Rs 638 crore, according to BSE's provisional data. In the current month so far, FIIs have sold local shares to the tune of Rs 12,519 crore.

On Tuesday, S&P BSE Sensex opened at 37755 and logged significant gains to touch a high of 37,755.16, up 173 points. However, bears were back in action as key stocks indices retreated sharply from their day's highs on broad-based selling. The Sensex, after touching an intraday low of 36888.49, finally ended 623.75 points, or 1.66%, lower at 36958.16. The broader NSE Nifty 50 also followed suit and touched a low of 10901.60 before ending 183.80 points, or 1.65%, lower at 10925.85.

Of the 30-stock Sensex, except Reliance Industries (9.72%) and Sun Pharmaceutical Industries (3.71%), the rest of the pack ended in the red. Top losers of the day were YES Bank, Mahindra and Mahindra, Bajaj Finance, Bharti Airtel, HDFC and Maruti Suzuki India, which fell up to 10.35%.

All sectoral indices on Nifty, too, ended weak with Nifty Auto (-3.95%) leading the pack, followed by Nifty Financial Services (-2.98%), Nifty PSU Bank (-2.67%), Nifty Private Bank (-2.56%) and Nifty IT (-2.51%).

Broader market indices - midcap and smallcap – plunged sharply and underperformed the benchmark indices. Market breadth was negative on the BSE/NSE.

According to Romesh Tiwari, head of research, CapitalAim, benchmark Nifty50, on Tuesday, opened on a positive note and traded positively for the first half but in the latter half, it started to slide and closed on a very negative below the 11000 levels. With no clarity about the relief measures on surcharge tax on foreign portfolio investors (FPI) and stimulus for other sectors including auto, the domestic market may see further selling pressure with negative global markets.

“If it sustains below the 11000 levels, Nifty could further move downwards to 10850. The stocks of auto, pharma, and finance sector are looking weak and could show more downward movements,” Tiwari added.

Other Asian indices and European gauges also slumped on Tuesday, as fears about the raging US-China trade war, protests in Hong Kong and a crash in Argentina's peso currency drove investors to safe harbors like bonds, gold, and the yen. D

eepak Jasani, head retail research, HDFC Securities, said, “Indian equity indices registered their worst fall in over a month following the declines in Asian peers as turmoil in Hong Kong and Argentina spooked investors. With the Nifty correcting sharply and erasing a major part of the gains seen last week, the bears seem to have made a comeback. Further downsides are likely once the immediate support of 10904 is broken. Any pullback rallies could find resistance at 11042.”

Mustafa Nadeem, CEO, Epic Research, said, “While domestically we have been struggling lately with a credit crunch, higher cost of capital, slowing auto numbers along with tepid quarterly earnings and FII's exiting, the recent massive fall in Argentine Index of almost 40% in a day, geopolitical concern over Hong Kong and China have added to the injury. Further, the Asian markets were negative, largely, since morning and this has impacted the broader market as well. We believe the bears are here to stay for a while and it won't be easy and quick for the market to recover anytime soon. We remain cautious and maintain our sell on a rising approach.”

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