6:00 PM Mumbai, India – Sensex in Mumbai declined after markets in Asia plunged between 2% and 3%. Markets in Asia fell after China allowed its currency to fall further and faster. The central government of India plans to sell its $1.3 billion stake in Axis Bank.
Stocks on Dalal Street extended losses as markets in Asia declined for the third day in a row and extended 2016 losses.
Asia-wide market correction deepened after China let its currency drift 0.5% to lower against the dollar.
People’s Bank of China let the renminbi drop to 6.5646, a low seen last in 2011 after providing additional liquidity of $20 billion to financial markets only a day ago.
Shanghai financial markets were halted for the second day after market indexes plunged 7% in the first 29 minutes of trading. Markets were halted for the second day this week.
Market indexes in Shanghai have been volatile and had shot up more than 70% in 2014 and since then market indexes have erased nearly two thirds of gains in the last nine month.
Officials in China are forced to deal with two simultaneous issues, encouraging state controlled companies to use stock market and become more efficient and deal with the recent rise in dollar.
The central bank is expected to carry out more devaluation in the coming months which is also going to put pressure on the currencies of other developing nations. Chinese renminbi is expected weaken further in the next few weeks as the central bank looks to soften the recent rise of 10% in the U.S. dollar.
However, the central committee planners are still struggling with the huge debt overhang on the balance sheets of state controlled companies and the recent stock market plunge is not helping these companies to raise capital on the exchanges.
Rupee weakened 10 paisa to ₹66.92 against one U.S. dollar following the decline of currencies in Asia.
The Sensex Index dropped 554.50 or 2.2% to close at 24,851.53. The CNX Nifty declined 172.70 or 2.2% to 7,568.30.
Gainers & Losers
Axis Bank Limited
declined 4.9% to ₹409.35 after the central government plans to sell its $1.3 billion stake in Axis Bank.
Corporation Bank Limited
dropped 3.2% to ₹40.95 after the financial services provider plans to buy 4% stake in LIC Nomura Mutual Fund for ₹5.66 crore.
Jaiprakash Associates Limited
plunged 8.3% to ₹11.09 after the infrastructure developer signed an agreement with Shree Cement Ltd to sell its stake in Bhilai Jaypee Cement between ₹2,100 crore and ₹2,200 crore.
Kalpataru Power Transmission Limited
decreased 1% to ₹248.05 after the metal frameworks maker acquired Alipurduar Transmission.
McNally Bharat Engineering Company Limited
slipped 3.2% to ₹100 after the engineering services provider signed a memorandum of understanding with NIPPO India to jointly work on road construction projects in India.
National Buildings Construction Corporation Ltd
decreased 2% to ₹989.05 after the infrastructure developer secured contracts worth ₹8,523 crore in December 2015.
United Breweries Limited
slipped 1.6% to ₹925 after the company sold 19.58 lakh shares or 0.74% stake to ICICI bank.