Finance Minister says weak rupee, FII withdrawals behind market crash

Finance Minister Pranab Mukherjee today said that withdrawals by foreign institutional investors led to the market crash. Mr Mukherjee’s comments came after the markets plunged to near two year lows earlier in the day.

The Sensex had plunged nearly 600 points while the Nifty had given up up over 160 points. The Sensex and Nifty were among the worst performers among all Asian indices, falling nearly 3 per cent.

Analysts also attributed the panic selloff to liquidation by foreign funds. Fears of global slowdown also led to selling pressure across global equities.

Speaking about the weakness in the rupee, Mr Mukherjee said the situation is unlikely to improve till the Euro zone stabilised.

Here is the complete text of the statement made by the Finance Minister on the market crash:

INDIA’S GROWTH AND FUNDAMENTALS ARE STRONG AND  LOOK MORE ATTRACTIVE IN A WORLD CONFRONTING PROBLEMS; RBI IS CLOSELY MONITORING THE RUPEE SITUATION AND WILL DO THE NEEDFUL AS REQUIRED, SAYS FM.

The Union Finance Minister Shri Pranab Mukherjee said that RBI is closely monitoring the current rupee situation and he is sure that RBI will do the needful, as required. The Finance Minister further said that he would like to add that despite global uncertainty, FII Investments have been in the positive territory in October ($634 million) and November as of yesterday ($213 million). The Finance Minister Shri Mukherjee said that India’s growth and fundamentals are strong and they look more attractive in a world confronting problems.

The Finance Minister Shri Mukherjee was referring to the benchmark indices which lost 2.5 per cent as of 2 PM today as overseas markets declined on concerns over US' third quarter growth and high yields on Spanish bonds. He said that in India, a day ahead of the expiry of the November futures contract, trading remains choppy. Regarding the rupee, the Finance Minister Shri Mukherjee said that the volatility in the Rupee is also keeping investors nervous, though today the rupee recovered from a low of 52.73 to trade at 52.12 per dollar.

The Finance Minister Shri Mukherjee said that against an expectation of a more modest revision, the third quarter US GDP growth was revised downward to 2.0 per cent from the advance estimate of 2.5 per cent. As a result, the US markets closed lower by around 0.5 per cent yesterday. Asian stocks also fell in the range of 2 - 2.5 per cent, after a mining tax was approved in Australia’s lower house of Parliament, along with lingering concerns on Europe.

Markets crash: Sensex, Nifty hit 20-month low

India's benchmark indices fell sharply falling way below their 52-week lows admidst a selloff in markets across Asia. A slowdown in the US economic growth led to investors paring down exposure to equities. In the Indian context, a falling rupee has added to the pressure on profitability of companies.

At 1221 hours, the Sensex was down 450 points to 15,614 while the broader Nifty index declined 131 points to 4,680. The Nifty has fallen below the 4,700 mark for the first time in 20 months. The Nifty last traded below 4,700 levels on 8 February, 2010. Benchmark indices in Hong Kong, Korea and Taiwan also traded two to three per cent lower. 

"The Nifty support level was 4,720. Once it was taken off the markets witnessed a cascading effect. The Nifty can fall 200 points now as supply will overpower demand," Kiran Jadhav of Precision Technicals said.

Banking stocks saw the steepest cuts, falling 3.5 per cent. HDFC Bank plunged 6 per cent. ICICI Bank was down 4 per cent.

Energy and IT stocks also slumped nearly 3 per cent. Most other sectoral indices were trading with over 2 per cent cut.

All stocks were down on the Sensex. Jaiprakash Associates, Bharti, Reliance and JSPL were trading with over 4 per cent cuts.

Only two stocks were trading higher on the Nifty. RCom was up after three officials of Reliance ADAG were granted bail by the Supreme Court earlier today. GAIL was also trading higher.

The market breadth had collapsed with an overwhelming 92 per cent stocks falling on the broader BSE 500 points.

Among large cap stocks government oil major ONGC, India's largest PSU bank SBI, private sector lender ICICI Bank and Axis Bank made new lows today.

Sensex, Nifty crash to 52-week low amid global weakness

India's benchmark indices crashed over 2 per cent and have hit new 52-week lows as selling pressure gathered momentum on the bourses. A slowdown in economic growth in the US, which is the world's biggest economy, led to risk aversion across the globe.

At 1208 hours, the Sensex was down 360 points to 15,705 while the broader Nifty index declined 105 points to 4,707. The Nifty has broken the previous low of 4,720 made on 26 August this year.

Barring Cipla and Sun Pharm, all other Sensex stocks were trading lower. Similarly, only five stocks were trading higher on the Nifty.

Among large cap stocks government oil major ONGC, India's largest PSU bank SBI, private sector lender ICICI Bank and Axis Bank made new lows today.

Sensex, Nifty crash to near 2-year lows amid foreign funds exodus

Indian markets crashed Wednesday as the benchmark indices broke major support levels plunging to near two-year lows. The Sensex and Nifty were the worst performers among all Asian indices, falling nearly 3 per cent.

A slowdown in economic growth in the US, which is the world's biggest economy, led to risk aversion across the globe. Weakness in Chinese manufacturing data further raised concerns of another global recession.

At 1304 hours, the Sensex was down nearly 450 points to 15,614 while the broader Nifty index declined 130 points to 4,682. The Nifty has fallen below the 4,700 mark for the first time in over 18 months. The Nifty last traded below 4,700 levels on 8 February, 2010.

Analysts said the selloff was driven by foreign institutional investors (FII), who fear a slowdown in the country's economy and a possible downgrade by major rating agencies soon.

"The underlying retail investors in the western world are pulling out money from the risk assets, whether in the emerging markets or developed markets... FII fund managers have to find cash for which they have to sell," Saurav Mukherjea of Ambit Capital said.

"The currency factor is clearly not helping. It has really hurt investor returns. What is causing the sellout is that they (FIIs) don't see any reason for the rupee to pullback to 45," he added. The rupee has fallen nearly 14 per cent in the last quarter alone. However, the currency was trading higher today, possibly on the back of intervention by the central bank.

Technical analysts anticipate further weakness because key levels have been broken. "4,720 was a strong support and once it was taken off the markets are witnessing a cascading effect. The Nifty can fall 200 points now as supply will overpower demand," Kiran Jadhav of Precision Technicals said.

The volatility has increased ahead of the derivatives expiry on Thursday. The National Stock Exchange (NSE) volatility index was up nearly 14 per cent. "Intraday you might get some scare but you might want to test it further," Independent analyst Sarvendra Srivsatava said.

Banking stocks saw the steepest cuts, falling over 3 per cent. HDFC Bank plunged 5 per cent. ICICI Bank was down 3.5 per cent.

Energy and IT stocks also slumped nearly 3 per cent. Most other sectoral indices were trading with over 2 per cent cut.

Barring Cipla, all other stocks were down on the Sensex. Jaiprakash Associates, Bharti, JSPL, BHEL and Reliance were trading with over 3.5 per cent cuts. RCom was the only stock trading higher on the 50-stock Nifty index. It rose after three officials of Reliance ADAG were granted bail by the Supreme Court earlier today.

The market breadth had collapsed with an overwhelming 90 per cent stocks falling on the broader BSE 500 points.

Among large cap stocks, government owned oil major ONGC, India's largest PSU bank SBI, private sector lender ICICI Bank and Axis Bank made new lows today.

Sensex, Nifty crash amid growth, rupee concerns

Indian markets have closed with deep cuts Wednesday as foreign funds liquidated funds on the back of weakening rupee and economy. The Sensex and Nifty closed with over 2 per cent cuts after falling to near two-year lows in intraday trade.

The Sensex ended 365 points lower at 15,699.99 while the broader Nifty index closed at 4,706.45, falling 105.90 points. Earlier, the Sensex had fallen nearly 600 points (intraday low of 15,478.69) while the Nifty had slipped below the 4,700 mark (4,640) for the first time since February, 2010.

Indian markets have now fallen over 20 per cent year to date.

Global cues were not supportive. Economic growth slowed down in the US and Chinese manufacturing data raised further concerns of another recession. Asian markets witnessed sharp decline too. Markets in Taiwan and South Korea fell more than Indian indices. Most European markets were trading with 0.5-1 per cent losses when Indian markets closed.

Analysts said the selloff was driven by foreign institutional investors (FII), who fear a slowdown in the country's economy and a possible downgrade by major rating agencies soon.

"The underlying retail investors in the western world are pulling out money from the risk assets, whether in the emerging markets or developed markets... FII fund managers have to find cash for which they have to sell," Saurav Mukherjea of Ambit Capital said.

Finance Minister Pranab Mukherjee said that withdrawals by foreign institutional investors and weakness in the rupee led to the market crash.

"The currency factor is clearly not helping. It has really hurt investor returns. What is causing the sellout is that they (FIIs) don't see any reason for the rupee to pullback to 45," he added. The rupee has fallen nearly 14 per cent in the last quarter alone. However, the currency was trading higher today, possibly on the back of intervention by the central bank.

Banking, energy, capital goods and IT stocks ended with 2-3 per cent cuts. Consumer durables were the only group of stocks to close with gains. These stocks had fallen sharply yesterday. Most other sectoral indices ended with over 1 per cent cut.

Public sector power major NTPC was the only stock to end with gains on the Sensex. Infrastructure firm Jaiprakash Associates was the top loser on the Sensex, falling over 5 per cent. HDFC Bank, Bharti Airtel, BHEL and Wipro ended 3-4 per cent lower.

On the Nifty, Reliance Communications gained 0.5 per cent after the Supreme Court granted bail to three executives of ADAG group in the 2G case.

DB Realty and Unitech also gained after the court granted bail to their promoters. SKS Microfinance ended with 5 per cent gains ahead of the board meeting. The company's founder Vikram Akula is likely to resign.

The market breadth was extremely weak with an overwhelming 85 per cent stocks declining on the broader BSE 500 index.