Sensex tanks over 550 pts in early trade on worries FII outflow may get intense

Key local share indices faltered sharply in the morning trade Friday, much in sync with the bearish undertone prevalent in other Asian markets, as the benchmark Sensex plunged more than 550 points amid selling across-the-board, with rate-sensitive counters leading the slump.

Stocks fizzled out in early trades after yesterday’s bounce-back, as investors fear a strong August jobs data in the US, scheduled to be announced later today, could further strengthen the case for a rate hike by the Fed, possibly next month.

The markets fear this may lead to more exodus of funds from emerging market equities, including India, which has already seen massive capital outflows last month. Even as the key domestic share indices recovered some of its lost ground on Thursday, FIIs remained net sellers and offloaded equities to the tune of Rs 394.31 crore.

Economists polled by Reuters expect the US economy to have produced 220,000 new non-farm jobs last month, continuing the robust employment creation of the past five years, while average hourly earnings are predicted to have risen by a modest 0.2 percent, as they did in July.

Contrary to the likely US move, the ECB has indicated that its bond-buying programme may continue post September 2016.

At 10.15 am, the 30-share BSE S&P Sensex was at 25,243.57, down 521.21 points, or 2 percent. The index plunged 572 points to hit the day’s low of 25193. The broader 50-share CNX Nifty was at 7,668.95, down 154.05 points, or 2 percent.

Market breadth bore an extremely bleak picture as 1,536 stocks declined and just 253 scrips advances on BSE.

Among the other key Asian indices, Japan’s Nikkei fell the most, dropping 2.4 percent in early trade.

Several frontline stocks in the Sensex universe came under severe hammering. Shares of Tata Motors declined 4.5 percent to Rs 318.25, Vedanta 4.4 percent to Rs 93.75, Tata Steel 4.3 percent to Rs 219.85, Axis Bank 4 percent to Rs 467.05, ICICI Bank 3.6 percent to Rs 257.35, M&M 3.3 percent to Rs 1,107 and SBI 3.2 percent to Rs 225.15.

Other laggards such as BHEL, Hindalco, HDFC Bank, Gail, Dr Reddy’s, HDFC, NTCP, HeroMoto Corp, Reliance Industries and ONGC were down around 2-3 percent each.

Non-index stock Amtek Auto continued to reel under intense selling pressure and crashed nearly 19 percent to a low of Rs 25.6. However, the stock curbed some losses to trade 11.4 percent lower at Rs 27.95. On Thursday, the stock had plunged 37 percent.