The BSE Sensex and NSE Nifty 50 indices slumped on Tuesday, the first trading session since government data released on Friday showed that the country’s economic growth had fallen to an over six-year low of 5% in the April-June quarter. The markets were closed on Monday on the occasion of Ganesh Chaturthi.
The Sensex closed 769.88 points lower at 36,562 – its biggest one-day fall since October 2018, according to Mint. Nifty50 also dropped 225.35 points to settle at 10,797. At one point in the day, the Sensex fell over 850 points to 36,466. The market crashed due to massive sell-offs as investors panicked over the economic slowdown and global trade war.
On the BSE, ICICI Bank, Tata Steel, Vedanta, HDFC, IndusInd Bank, Tata Motors and ONGC saw their stocks decline the most. The PSU banking index on the NSE fell 5% after the Centre announced the mergers of 10 banks to revive economic growth. Stocks of Indian Bank, Canara Bank, Union Bank and Oriental Bank slumped between 10% and 12%. Only two IT stocks – TechM and HCL Tech – made small gains.
“The sharp fall in the Q1 GDP growth to 5% and the weak core sector growth are the key factors that have caused a fall in the markets as it opened after a long weekend,” Joseph Thomas, Head of Research at Emkay Wealth Management, told PTI. “The continuing negative global cues, the raging tariff war between the US and China, and the likely sluggishness in the economic fortunes of economies around the world have also been behind the rot in the markets here as well as elsewhere.”
The rupee plummeted to the year’s lowest level amid concerns that foreign funds might continue to pull out amid the slump in the economy. The currency weakened as much as 1.2%, also weighed down by a stronger dollar and a lack of progress in the US-China trade talks, Bloomberg reported.
Data released by the commerce ministry on Monday showed growth in eight core sectors – coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity – had dropped to 2.1% in July against 7.3% growth in the same period last year.
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