China bloodbath soaks world markets
25 Aug 2015 6:05 AM IST
However, unlike in the previous few weeks, the latest stock exchange <g data-gr-id="33">rout</g> in the world’s <g data-gr-id="32">second largest</g> economy led to a wave of panic selling right across the international markets.
As part of the global bloodbath, our own Bombay Stock Exchange’s (BSE) key 30-share Sensitive Index (Sensex) suffered its worst ever single-day drop of 1,624.51 points to close at 25,741.56 points, down a staggering 5.94 per cent. This was the weakest closing for the Sensex since August 11, <g data-gr-id="38">2014,</g> when it ended at 25,519.24. The rupee too plummeted by 82 paise to a two-year low of 66.65 against the dollar.
During the most forgettable day of our market history, total investor wealth, measured in terms of cumulative market value of all listed stocks, plunged by nearly Rs 7 trillion to below the Rs 100 trillion mark to end the day at Rs 95,28,536 crore. The panic was displayed across sectors, with jittery investors selling off shares in energy, banking, auto, information technology, infrastructure and real estate.
The Sensex has now retreated by 2,190.08 points in three straight sessions. The broader National Stock Exchange’s (NSE) Nifty index tanked 490.95 points (5.92 <g data-gr-id="49">per cent</g>) to 7,809 at <g data-gr-id="46">close</g>.
Global crude oil too went below the $40 per barrel mark amid weak Chinese manufacturing growth and global oversupply. Extending its two-week winning streak, gold surged Rs 150 in the national Capital to hit a three-month high of Rs 27,575 per 10 gram on seasonal buying by jewellers as investors fled stock market.
Data on Friday showing Chinese manufacturing activity slowed to a 77-month low had added to the gloom, signalling that even a campaign by Beijing with its vast arsenal of reserves has not been able to stimulate growth. In other top Asian markets, Hong Kong’s benchmark fell 5.17 <g data-gr-id="41">per cent</g>, Tokyo 4.61 per cent, and Sydney lost 4.09 <g data-gr-id="42">per cent</g>. More than 800 stocks listed in Shanghai fell by their maximum 10 <g data-gr-id="43">per cent</g> daily limit, among them many of the brokerages that spurred a year-long rally that saw shares soar 150 <g data-gr-id="44">per cent</g> before they collapsed in June.
In the USA, the New York Stock Exchange’s Dow Jones industrial average dropped more than 1,000 points (over 5 <g data-gr-id="25">per cent</g>) in the first minutes of trading, the S&P 500 initially fell by over 5 <g data-gr-id="26">per cent</g> and the Nasdaq was down more than 8 <g data-gr-id="27">per cent</g>. These indices, however, recovered a considerable part of their early <g data-gr-id="34">losses</g> but the Dow Jones industrial average was still down about 1.2 <g data-gr-id="29">per cent</g> in <g data-gr-id="28">mid-day</g> trading.
Let us convert world’s crisis into India’s opportunity: PM
Amid a bloodbath in the markets, Prime Minister Narendra Modi on Monday reviewed the situation and favoured pushing ahead with the reforms agenda and taking more steps to strengthen the economy.
Finance Minister Arun Jaitley told reporters that the Prime Minister took stock of equity and currency markets, and was of the opinion that “our economy is stable” but more needed to be done.
The review of the economy at the highest level came against the backdrop of the benchmark Sensex plunging by 1,624.51 points to 25,741.56 -- its lowest level since August 2014 -- and nearly Rs 7 lakh crore getting wiped out from the investors’ wealth.
Besides, the rupee also fell the most in 23 months to hit two-year low at 66.64 against the US dollar.
“PM is of the opinion that in order to further strengthen our economy, we should take more steps,” Jaitley said, adding there will be no change in the strategy and the initiative to attract investors would continue.
He said <g data-gr-id="101">further</g> discussion will be held with private and public partners to take “measures to attract investors and use the situation as an opportunity”.
The Prime Minister, he said, is keen that the present global crisis should be converted into an opportunity for India.
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