Sensex Falls Sharply Amid Slump in Global Markets: 10 Developments

BSE Sensex and Nifty fell sharply on Tuesday amid a slump in global markets. Lower-than-expected GDP (gross domestic product) data also weighed on markets. The Sensex fell over 450 points at its day's low of 25,822 while Nifty slumped to 7,823.

Here are top 10 developments:

1) Gaurang Shah of Geojit BNP Paribas said that the sharp fall in Indian equities today is a reflection of a selloff in Japan and China markets. Major European markets fell nearly 2.5 per cent in early trade. The Dow futures were down 1.65 per cent, indicating that Wall Street is poised to open sharply lower later today.

2) Major Asian markets fell sharply today following lower closing on Wall Street and weak China economic data. Japan's Nikkei slumped nearly 4 per cent while overnight the Dow fell over 100 points or nearly 0.70 per cent.

3) In China, the stock markets fell nearly 5 per cent before paring some losses to end 1.3 per cent lower. Activity in China's manufacturing sector contracted at its fastest pace in three years in August, an official survey showed on Tuesday, reinforcing fears of a sharper slowdown in the world's second-largest economy despite a flurry of government support measures. A similar official survey in China on the services sector showed activity was cooling there, too.

4) India's GDP or gross domestic product data released yesterday showed that the economy expanded at an annual 7 per cent rate in the April-June quarter, slower than provisional growth of 7.5 per cent in the previous quarter.

5) The less-than-expected GDP data has however spurred calls for rate cuts from the Reserve Bank of India. Mr Shah said that possible RBI rate cut and an upgrade in India's sovereign ratings could be next upside triggers for markets. A team from ratings agency Standard and Poor's met with Finance Ministry officials on Monday.

6) Some analysts say that the recent selloff has made Indian markets attractive from a long-term perspective. Mr Shah of Geojit BNP Paribas likes select IT, pharma, FMCG, auto and oil retailers from a 1-year perspective. Market analyst Sandip Sabharwal said that Nifty is in the process of bottoming out and investors should use dips to buy stocks.

7) Concerns over China slowdown and uncertainties over a possible US Federal Reserve rate hike this month have led to a turmoil in global markets with benchmark indices in different countries logging their biggest monthly losses in August in many years. The Sensex had its worst month in nearly four years.

8) Coming back to Indian markets, analysts say that unless selling from foreign institutional investors abates, Indian stocks are likely to remain under pressure. Foreign institutional investors hold nearly 25 per cent of BSE 200 stocks.

9) Foreign investors sold Indian shares worth Rs 551 crore on Monday, bringing their total sale figure to nearly Rs 17,000 crore in nine sessions. In contrast, domestic institutional investors have been buyers of Indian equities in the past few days, offering some support to Sensex and Nifty.

10) The value of the rupee would also be under focus with as it impacts the returns of foreign investors in dollar terms. The rupee rose to 66.19/dollar at its day's high as compared to its previous close of 66.48. In August, the rupee fell nearly 3.5 per cent following China's devaluation of its currency.