Pre Session-Sensex Bears set to return on continued China sell-off
26/08/2015
The sharp rebound in Indian equity benchmarks witnessed on Tuesday may prove to be short-lived as markets in China extended the steepest four-day rout since 1996 that has wiped out over USD 8 trillion from global stocks since Aug. 11 when China stunned markets by devaluing the yuan by the most in two decades. Volatility may remain high at domestic bourses amidst the continued global panic fueled by worries over a worsening slowdown in China, while caution ahead of the expiry of the August Futures & Options (F&O) contracts tomorrow may also keep Dalal Street edgy. Snapping a three-day losing streak and following the biggest slump in six years, the 30-share Sensex on Tuesday rallied 290.82 points or by 1.13 per cent to end at 26,032.38 as the rupee staged a rebound vs. the dollar, while beaten down stocks induced bargain buying and hopes of the passage of the long pending GST bill in Parliament also bolstered sentiment as reports emerged that the government is consulting with the opposition to hold extra sittings of the Parliament to give nod to the biggest fiscal breakthrough reform bill in Indian history. Against the backdrop of a mostly weak trend across Asia and a bearish finish at Wall Street overnight, coupled with weakness in the SGX CNX Nifty Index futures for August delivery which fell 1.32 per cent or 102.50 points at 7,783 at 10:35 am Singapore time, Dalal Street is set for a gap down opening today.
China’s Shanghai Composite remained in firm Bear terrain today as fresh stimulus announcement from the country’s central bank failed to lift sentiment. The People’s Bank of China late Tuesday cut interest rates for a fifth time since last November and lowered the amount of cash to be kept aside by banks, in a bid to jumpstart lending and help arrest a slowdown in the world’s second biggest economy, and revive the country’s battered stock markets. China cut interest rates by 25 basis points with the key lending rate now at 4.6 per cent while the bank reserve ratio was slashed by 50 basis points. While the Chinese benchmark gauge slipped by over 0.40 per cent today, it plunged 7.6 per cent yesterday. Meanwhile Hang Seng was also trading in the red but Japan’s Nikkei 225 advanced even as Wall Street on Tuesday closed with significant losses after reversing earlier gains as volatility remained extremely high. The Dow Jones Industrial Average and the S&P 500 shed over 1 per cent on Tuesday while the Nasdaq Composite declined too as worries over China overshadowed upbeat US data which showed that new home sales jumped in July and consumer confidence soared to the second highest level in eight years in August.
