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China move fails to calm nerves, Sensex tanks 318 points

Mumbai :The relief rally proved to be short-lived when the benchmark BSE Sensex on Wednesday failed to capitalise on the previous session’s gains, falling 318 points to settle below the 26,000-mark, as investors steered clear of risky bets.

This is the fourth fall in the last five days.

Cautious investors are not convinced that the latest round of monetary easing by PBOC—the central bank of China—is enough to stabilise its economy and arrest the slide in global markets.

On Tuesday and Wednesday, PBOC announced a slew of measures, including a cut in lending rate and lenders’ reserve ratio, in a bid to put its growth engine back on track.

“The move was widely anticipated by markets worldwide and the same sent pessimistic signals about the Chinese economy to the world markets,” said Satya Prakash Goel, Director, Bonanza Portfolio.

There is a feeling among Chinese market participants that policymakers should do more to fix the problem.

Weakness in the rupee against the dollar played it role too.

The market was weighed down by sectoral losses in banking, healthcare, FMCG, IT, oil and gas and capital goods.

Profit-booking ahead of the August derivatives contract expiry on Thursday also pulled the index down.

The gauge slipped below the 26,000 level to hit a low of 25,657.56 before ending down 317.72 points, or 1.22 per cent, at 25,714.66.

It had rallied 291 points yesterday after the government made it clear that it will make another attempt to pass the stalled GST Bill.

The 50-issue NSE Nifty broke below the 7,800-mark, down 88.25 points, or 1.13 per cent, to 7,791.85.

BSE banking index suffered the most losing 1,68 per cent. In the 30-Sensex pack, 18 ended with losses.

While the small-cap index rose 0.16 per cent higher, mid-cap dropped 0.79 per cent.

The selling pressure remained as foreign investors net sold shares worth Rs 2,080.01 crore yesterday, according to provisional data.

Chinese stocks fell for the fifth consecutive session and European stocks were sharply lower in early trade. The Shanghai Composite fell 1.27 per cent, Hong Kong’s Hang Seng slumped 1.52 per cent and Singapore’s Straits times settled 0.46 per cent down.

But Japan’s Nikkei jumped 3.20 per cent while Korean index surged 2.57 per cent.

Amid the slump, BHEL was the bright spot, up 3.45 per cent, followed by Tata Motors, Bajaj Auto, Wipro and Coal India.

The market breadth remained marginally weak as 1,345 shares declined as against 1,321 that advanced.

The total turnover dropped sharply to Rs 3,134.13 crore, from Rs 4,804.66 crore yesterday.

“The immediate movement will depend on rupee trend for which RBI will have to provide additional support. FIIs will come back to the Indian market once the consolidation of global markets ends as we are the best class among the emerging markets,” said Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services.