Sensex plunges 1,588 points intra-day as China worries rile markets

The Indian stock market bench mark Sensex plunged over 1,556.29 points at 3:15, minutes before closing, in the year's biggest intra-day crash, and the rupee hit a two-year low 0f 66.49 a dollar in early trade on Monday on heavy selling by foreign funds.

As the China rout gathered pace, Sensex crashed, going down by 1,556.29 points intra-day, making it the biggest crash in about seven years and the fourth biggest-ever for the BSE benchmark index.

The broader National Stock Exchange benchmark Nifty futures contract opened with a huge gap down for the second consecutive trading day. The contract opened at 8,010 and recorded a high of 8,074 only to fall sharply to a low of 7,931.8.

All 50 constituents of Nifty were in red with Tata Motors and ONGC losing the most up to 6 per cent.

Despite the bloodbath at Dalal Street, the offer-for-sale by the government to divest its 10-per cent stake in Indian Oil Corporation received a moderate response till 11.05 a.m on Monday.

At 12.28 p.m., the benchmark BSE Sensex crashed over 1,050 points, quoting at 26,307.86, down 1,058.21 points or 3,87 per cent. The Nifty plunged 328.75 points or 3.96 per cent to 7,971.20.

Brokers said sentiments suffered a jolt following a sell-off in other Asian markets with over 8 per cent plunge in Shanghai index.

Among major Sensex losers, ICICI Bank fell by 4.5 per cent, Infosys by 3 per cent, Axis Bank by 5.3 per cent, Reliance by 4 per cent and HDFC by 3 per cent. Tata Motors fell by over 6 per cent.

Realty index plunged the most by 5.7 per cent, followed by power 5.25 per cent, infrastructure 5.06 per cent and oil & gas 4.99 per cent. More on this

As stocks and rupee hit new lows after funds pulled away cash from markets, Reserve Bank Governor Raghuram Rajan today allayed fears citing strong macroeconomic fundamentals of the country which are much better than many others.

Rajan assured financial markets that the central bank will have no hesitation in using the foreign exchange reserves to reduce volatility in the currency market.

The central bank is not a ''cheerleader'' for the economy, elevating sentiments unduly, to deliver booster shots to the stock market so that it can soar for a while, only to collapse when reality hits, said Rajan.

Elsewhere in Asia, the Shanghai market crashed 8 per cent on concerns that the Chinese economy was slowing more than previously thought.

Chinese stocks dived more than 8 per cent on Monday morning, with the Shanghai index giving up all its gains for the year on investor disappointment that Beijing held back expected policy support at the weekend after markets shed 11 per cent last week.

The US Dow Jones Industrial Average ended 3.12 per cent down in Friday's trade.

Meanwhile, crude prices fell after slipping below $40 barrel for the first time in six years after weak Chinese manufacturing data.