BSE Sensex falls to a 20-month low

The benchmark Sensex is now nearing a bear cycle, having lost 19.86 per cent when compared with its all-time high of 30,024.74. A generally accepted measure of a bear market is when a stock index falls 20 per cent from its peak.

Meanwhile, the broader Nifty lost 125.80 points, or 1.69 per cent, to close at 7,309.30 on Wednesday.

The fall in the Indian indices was in line with that of the negative trend in the global markets. Among the leading Asian indices, both Hang Seng and Nikkei lost more than 3 per cent each. The Shanghai Composite lost 1 per cent on Wednesday, bringing its overall fall from its all-time high to 42 per cent. The benchmark indices of China, Hong Kong and Japan have all lost more than 20 per cent from their peak, signalling a bear cycle.

“There is a global meltdown happening and India is also suffering because of the overall weak trend,” said R Venkataraman, managing director, IIFL. “Indian markets are also falling in line with other markets. Having said that, I think India is better placed to recover but will have to wait for an overall upturn. I think markets will consolidate at current levels and then wait for cues from the budget,” said Mr. Venkataraman.

Equity markets globally have been witnessing weakness on account of an economic slowdown in China. The International Monetary Fund (IMF) has already cut its global growth outlook thrice in less than a year.

The IMF has attributed the weak trend to a sharp slowdown in China and falling commodity prices that are impacting most of the emerging markets.

Crude futures fell below $28 per barrel – the lowest level since 2003 – over concerns of an oversupply amidst falling demand on account of the bearish economic outlook.

In India, almost 2,200 stocks lost ground on BSE, as against only 460 gainers. Further, a total of 408 stocks hit their lower circuit, the maximum permissible limit of fall. All the sectoral indices also ended in the red.

Data as per the National Securities Depository Ltd (NSDL) shows that foreign institutional investors (FIIs) have sold Indian shares worth Rs.7,146 crore.

Among the frontline stocks, Tata Motors, Maruti, Coal India, Reliance Industries, State Bank of India and Adani Ports all lost more than 3 per cent each. Interestingly, the 3.76 per cent fall in the shares of Reliance comes only a day after the company announced a quarterly profit of Rs.7,290 crore.

Reuters reports:

Oil sinks

Oil futures fell further on Wednesday, with U.S. crude touching its lowest since 2003. U.S. crude oil dropped more than four per cent in early trading, falling to as far as $27.32 a barrel. Brent futures fell by 75 cents to $28.01 a barrel.