Sensex crashes 770 points; Nifty ends below 10,800: key factors that weigh in the markets

NEW DELHI: Friday's equity indexes ended with heavy losses with the benchmark BSE sensex plummeting more than 750 points amid weak national and global signals. Sensex fell 770 points or 2.06 percent to close at 36,563 in the first trading session this week, while the largest NSE Nifty moved 225 points or 2.04 percent lower to settle at 10,798. Markets closed on Monday because of 'Ganesh Chaturthi'.

The main laggards in the BSE index include ICICI Bank, Tata Steel, Tata Motors, IndusInd Bank, Reliance Industries and HDFC with a drop in their shares of up to 4.58 percent. 28 of 30 actions ended in red in the sensex package. In NSE, all subscripts ended in red with Nifty PSU Bank and Metal sliding up to 4.87 percent.

These are the main reasons behind the slide:

Weak macroeconomic data:

The growth of eight central industries fell to 2.1 percent in July, mainly due to the contraction in the production of coal, crude oil and natural gas, according to government data published on Monday.

The eight main industries in the sector: coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity, expanded 7.3% in July last year.

The GDP (gross domestic product) data has also shown a slowdown with a growth rate that was reduced to more than six years of 5 percent decline in the first quarter of the current tax, mainly due to the sharp decline in the sector manufacturing, which registered almost a flat growth of 0.6 percent.

In addition, the country's manufacturing sector activity decreased to its minimum of 15 months in August, due to slower increases in sales, production and employment, the IHS Markit India Manufacturing Purchasing Managers' Index showed.

Fall in the automotive sector:

The automotive sector experienced a decrease in double-digit sales in August, as it continued to stagger under one of the worst slowdowns in its history.

The sharp decline in sales to dealers worries industry executives who are renewing orders for a tax reduction on cars, two-wheelers and trucks, while car analysts are cutting their sales forecasts for the year.

Trade war between the United States and China:

On the global front, the United States began imposing tariffs of 15 percent on a variety of Chinese products on Sunday and China began imposing new tariffs on US crude oil, the latest escalation in its trade war.

Although US President Donald Trump said both sides would still meet to talk later this month, tensions have shown little sign of diminishing.

China said on Monday it filed a complaint against the United States at the World Trade Organization (WTO) about Washington's import tariffs, shattering the latest tariff measures for violating the consensus reached by the leaders of China and the United States at a meeting in Osaka

Low PSB:

Public sector banking stocks plummeted after the government announced the merger of 10 state lenders into four. The mergers announced on Friday, along with two consolidations established last year, will reduce the number of state banks to 12 of 27 in 2017. Some of the PSB shares plummeted about 10 percent during the day.

Meanwhile, the Indian rupee weakened to 72.03 against the dollar, compared to its 71.41 close on Friday.

(With agency contributions)