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The Chinese stock crash is hurting India in more than one way

The Chinese stock crash is hurting India in more than one way
Stock Market2 min read

Indian shares closed nearly 2 percent lower, falling below a crucial support level, as a panic-induced sell-off in China hurt domestic sentiment on Dalal Street.

The Nifty fell 154 points to end the day at 8,356, substantially below the important 8,420 support level. All 50 shares on the Index ended in losses. Metal stocks lead the losers' brigade as fears of a Chinese slowdown pushed them to fresh lows. The Sensex fell 484 points to close at 27,688.

Metal stocks, already reeling at multi-year lows, took another punch on their face as the world's biggest consumer of all things mineral and metal -- China -- went through a strong bout of volatility. Vedanta plunged 9 percent in trade. SAIL, Hindalco, NMDC, Tata Steel and stocks belonging to the Jindal group posted heavy losses.

Chinese stocks markets closed 5 percent lower in trade today after a series of government initiated measures failed to stem a growing tide of foreigner-led equity sales in the world's second largest market. Chinese stocks are down more than 30 percent since the start of June on fears of excessive valuations and a possible slowdown in GDP growth. A classic Ripple Effect is happening in China as panicked investors head for the exit in droves.

Within the commodities space, underlying metals are in a severe bear market: Copper and Aluminium are trading at 6-year lows. The forward premia on Aluminium have halved to $150/T in global markets as fears of a slowdown in demand.

Meanwhile, Tata Motors hit a fresh 52-week low as fears of an impending slowdown in China, its main market for JLR cars, caused a fresh sell-off.

Yes Bank plunged 7.3 percent after a report by global brokerage UBS cut its price target to 740 rupees from share from 1,000 earlier.

However, there were some stocks that bucked the bearish trend: Airline companies enjoyed the bounce as prices of Crude oil, fuel constitutes up to 50 percent of Airline costs, hit 3-month lows. Both Jet Airways and Spice Jet saw positive movement.

Crompton Greaves posted modest gains on media reports that the company stuck a large deal to supply electrical motors to cement giant Lafarge.

(image credits: emergingequity)

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