Indian stock indices BSE Sensex and NSE Nifty plummeted nearly 770 points and 225 points respectively on Tuesday after India’s economic growth dropped to over the six-year low of 5%.
The deepening economic crisis triggered investors sell off across the board. The massive sell-off saw investor wealth eroding away by Rs 2.55 lakh crore.
The Indian markets opened on Tuesday after an extended weekend, its reacted to the worsening local economic situation and the trade war between US-China.
After nosediving 867 points during the day, the 30-share index ended 769.88 points, or 2.06%, lower at 36,562.91. The broader Nifty also sank 225.35 points, or 2.04%, to settle at 10,797.90.
The rupee plunged 90 paise (intra-day) to trade at 72.27 per US dollar.
Public sector banking stocks tumbled up to 9.3% percent after the government on Friday announced the merger of 10 state-run lenders into four.
“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. 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,” said Joseph Thomas, Head of Research at Emkay Wealth Management.
Weak domestic consumption, especially in rural areas, has resulted mainly from low employment levels and non-availability of finance, which are issues that call for immediate measures to salvage the situation, Thomas added.
Despite several efforts by the government to boost the economy, market sentiment took a hit on account of weak macroeconomic data releases and double-digit decline in auto sales in August.
Official data released after market hours on Friday showed that India’s GDP growth slipped to an over six-year low of 5% in the June quarter of 2019-20, the decline was hit by a steep fall in manufacturing output and farm sector activity.
Source : Various