The BSE Sensex closed 0.58 per cent lower at its lowest close since May 30, 2014
India's stock markets extended losses on Tuesday, falling to fresh 1-1/2-year lows as risk aversion ahead of a slew of corporate results, including from Tata Consultancy Services, weighed on sentiment. The benchmark BSE Sensex closed 0.58 per cent lower at its lowest close since May 30, 2014. The broader NSE Nifty ended 0.71 per cent lower, its lowest close since July 14, 2014.
Here are 10 things to know about Tuesday's selloff:
1) Sustained selling by foreign institutional investors has hurt domestic equities, analysts say. FIIs have sold shares in six of the previous seven sessions. Till Monday, they had taken out over Rs 4,500 crore from domestic cash markets.
2) Domestic institutional investors have been buying shares at lower levels, but they have not matched the selling by FIIs. The mismatch between FII selling and DII buying is weighing on sentiments, traders said.
3) IT and banking stocks led the losses on Tuesday. Analysts say concerns about weak earnings in the December quarter is weighing down these sectors.
4) Tata Consultancy Services, India's biggest outsourcer, is expected to report tepid growth in revenues post market hours today. TCS shares fell over 2 per cent to their 52-week low.
5) Losses in banking stocks were led by private lender Axis Bank, which had reported asset quality troubles in the previous quarter.
6) UBS said corporate earnings consensus for FY16, FY17 and FY18 still looked optimistic, and expected about an 8 per cent cut to earnings forecasts this year.
7) Oil & gas stocks were also under pressure tracking the continue decline in global oil prices. Cairn India and ONGC fell over 2 per cent to be among other major Nifty 50 losers. Analysts say there could be major losses if crude oil slips below $30 per barrel.
8) Right from the beginning of 2016, markets have been rocked by plunges in Chinese stocks, the yuan's fall and subsequent heavy intervention by the Chinese authorities. The chaotic moves have led to worries China's economy may be in for tough time rather than stabilising as some had hoped.
9) Analysts advised investors to be cautious and warned against bottom fishing. Market expert Sudip Bandyopadhyay said, "It is too early to say that the worst is over for Indian markets... The developments in Chinese currency and economy need to be closely watched."
10) Market analysts have not ruled out the possibility of Nifty slumping to 7,300 levels, driven primarily by global concerns, particularly depreciation of Chinese currency yuan and worries about China's economy.