Sensex Slips below 25,000 to 14-Month Low Amid Rupee Tumble

Domestic stock markets, roiled by developments in China and the US, resumed their downward slide on Monday, with the BSE Sensex slipping below the psychological 25,000 mark for the first time since July 14, 2014. The Sensex dropped over 200 points, while the broader Nifty traded 70 points down, below the key 7,600 levels. The rupee also weakened sharply against the US dollar. 

Here are five things to know about the selling today:

1) Monday’s weakness is being attributed to weakness in the rupee. The Indian currency declined 39 paise to hit a two-year low of 66.85 per dollar. The rupee has been trading around two-year lows for some weeks now.

2) The rupee slipped tracking weakness in China’s yuan. Investors sold the Chinese currency on Monday and the central bank was seen to be less heavily intervening in the market via state-owned banks.

3) Continued weakness in Shanghai, where markets wobbled after resuming trading following a four-day long weekend also pressured the BSE Sensex. Chinese markets fell 3.5 per cent, extending their decline to a seventh straight session on Monday.

4) The August jobs report in the US did little to quell uncertainty about whether the Federal Reserve will hold off from hiking interest rates this month. The Fed has not raised rates in nearly a decade, leading to fund flows in emerging countries like India. Concerns about a rate hike in the US as early as next week, have led to selling by foreign investors.

5) Huge selling by foreign investors has hurt sentiment in domestic stock markets, analysts say. FIIs have sold domestic cash shares worth nearly Rs 4,000 crore in last four trading sessions. Between May and August, they sold a net around Rs 30,000 crore of shares.