Sensex Slips Below 25,000 to 15-Month Low Amid Rupee Tumble

Domestic stock markets, roiled by developments in China and the US, slumped 1.2 per cent on Monday, with the BSE Sensex closing below the psychological 25,000 mark for the first time since June 4, 2014. The Sensex declined 308 points, while the broader Nifty closed 96 points down at 7,559. The rupee also weakened sharply against the US dollar.

Here are five things to know about the selling today:

1) The fall in equity markets is being linked to the sharp fall in the rupee, which declined as much as 39 paise or 0.6 per cent to two-year low of 66.85 per dollar. The rupee, which slipped tracking China’s yuan, is on course for its third straight decline on Monday.

2) Weakness in Shanghai, where markets wobbled after resuming trading following a four-day long weekend, continued to pressurize the BSE Sensex. Chinese markets fell as much as 3.4 per cent today.

3) Continued uncertainty about whether the Federal Reserve will hold off from hiking interest rates this month has been weighing on foreign flows. 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.

4) 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.

5) Domestic factors such as weak monsoons, lower-than-expected GDP growth and slower pace of economic reforms have also contributed to the recent selloff, analysts say.

The BSE Sensex has fallen for four straight weeks, and is off over 16 per cent from the record highs it hit in March 2015.