Sensex down 200 pts, Nifty hovers around 8450 on China woes

Moneycontrol Bureau

9:55 am BRICS Bank: On the eve of the BRICS Summit to be attended by Prime Minister Narendra Modi, Finance Ministers of the five member countries met today, focusing their discussions on the contours and other elements of the BRICS Development Bank. Finance Minister Arun Jaitley participated in the discussions that took place in Moscow.

The meeting, chaired by Russian Finance Minister Anton Siluanov and also attended by China's Lou Jiwei, South Africa's Nhlanhla Nene and Brazil's Joaquim Levy, also discussed recent developments in the world economy, including the economic crisis in Greece.

9:35 am Will China continue to hurt India? Ruchir Sharma, head of emerging markets and global macro, Morgan Stanley Investment Management, says the entire move up that the Chinese market witnessed over the past 12 months had absolutely no fundamental basis. "We've lived through many bubbles in the past and this bubble in China meets all the checklists of a classic mania and a bubble," he says.

According to Sharma, it is the most extreme bubble the market has seen in the last 20-30 years since there was no fundamental basis for this massive rally given the weak state of the Chinese economy and the amount of margin debt which it accumulated in such a short span of time.

The amount of margin debt today in the Chinese stock market is higher than any market in history, he adds.

9:28 am Market check: The market recovers a bit from intial knock out. The Sensex is down 195.44 points or 0.7 percent at 27976.25, and the Nifty slips 65.25 points or 0.8 percent at 8445.55. About 514 shares have advanced, 901 shares declined, and 90 shares are unchanged.

HUL, Cipla and Dr Reddy's Labs are top gainers while Vedanta, Tata Motors, Hindalco, NTPC and Tata Steel.

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Chinese market took its toll on Indian market knocking off yesterday's  gains, The Sensex is down 256.65 points or 0.9 percent at 27915.04, and the Nifty slips 71.60 points or 0.8 percent at 8439.20. About 173 shares have advanced, 491 shares declined, and 67 shares are unchanged.

Vedanta, Tata Motors, Axis Bank, Hindalco and Lupin are major losers in the Sensex.

China has halted trade in stock markets due to irrational selling. China trading halt leaves 43 percent of entire stock market frozen. China's securities regulator warned there was "panic sentiment" in mainland stocks on Wednesday, saying there had been a surge in "irrational selling" as markets plunged further into bear market territory.

The statement from the China Securities Regulatory Commission (CSRC) did little to soothe investor worries about tumbling equities, with the Shanghai Composite sinking as much as 8 percent in early trade on Wednesday before paring losses to around 5 percent.

Nikkei  has fallen most in five years while base metals prices have crashed.  Gold fell to a near four-month low overnight while silver sank nearly 7 percent and platinum dropped to a 2009 low, as the dollar rallied. Copper prices hit their lowest level in six years overnight on the dollar gains and on concerns over demand from China. Global cues to watch out today are the Euro zone meeting, FOMC minutes and US earnings season.

Meanwhile, Greek drama drags on as the Greek government has to present a detailed reform proposals to allow a bailout deal by a Sunday summit. Failure to reach a deal would make a "Grexit" more likely. US stocks posted a sharp recovery in the second half of the session to erase earlier losses. At the closing bell, the Dow Jones Industrial Average gained 0.5 percent, the S&P 500 added 0.6 percent and the Nasdaq Composite moved 0.1 percent higher.

European markets closed sharply lower on concerns that Greece’s negotiations with its creditors will drag on without a viable debt plan.

Nymex trades above 52 dollars per barrel while Brent holds above the 56 dollar mark. Iran’s determination to seal a nuclear deal with global powers to bring more of its crude to an oversupplied market and the restart of a key oil terminal in Libya also weighed on oil prices.

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