The BSE Sensex slumped 807 points, or 3.4 per cent, on Thursday, tracking a huge selloff in global markets. Investors dumped shares of state-run lenders, which weighed on market sentiments. Relentless selling across the board sent the Sensex crashing below 23,000, while the broader Nifty ended below the key 7,000 levels for the first time since May 2014. The Sensex settled at 22,951 after suffering its biggest single-day loss since August 2015.
Here are the latest developments:
1) Thursday's selloff was led by severe selling in state-run lenders. State Bank of India, the country's top lender by assets, slumped 3 per cent after it reported a 62 per cent fall in quarterly profit because of higher bad loans. (Read)
2) Most other state-run lenders, which reported numbers today, announced huge losses because of a surge in bad loans. Shares of Bank of India, the country's third largest lender by assets, sank 6 per cent after it reported a loss of Rs 1,506 crore in Q3. (Read)
3) Over the last few days, PSU lenders such as Allahabad Bank, Central Bank of India, Dena Bank, Indian Overseas Bank and Oriental Bank of Commerce have all reported huge losses on account of rising bad loans. (Read)
4) Analysts have attributed the sharp rise in bad loans in Q3 to the Reserve Bank's order asking lenders to treat some stressed borrowers as non-performing even if they have not defaulted yet. The RBI's directions followed Governor Raghuram Rajan's call for cleanup of bank balance sheets by March 2017.
5) India's volatility index, which is a measure of fear among investors, surged 16 per cent to a 21-month high.
6) Sentiments were also weighed down by continued decline in the rupee, which fell to 68.25 per dollar. The rupee has been under huge pressure because foreign investors have turned net sellers in the equity markets.
7) Economic Affairs Secretary Shaktikanta Das downplayed weakness in Indian stocks, which have wiped out gains since Prime Minister Narendra Modi won power in May 2014. He said Indian markets were performing relatively well and that their decline was driven by global trends. (Read)
8) The decline by the Indian rupee against the US dollar is not exceptional and the currency is performing relatively well, Mr Das said. While the rupee had declined by 6.5 per cent against the US dollar since last April, it has actually risen against the euro and the yen while holding its own against the sterling, he added.
9) Domestic markets were also influenced by global equities. Markets in Asia fell sharply today, while most European indices fell 2-3 per cent. Traders say global slowdown and China worries have been a drag.
10) Market expert Ajay Bagga advised investors to stay on the sidelines and preserve cash. "Corporate earnings are not improving, government is not infusing money (in banks)... Things will get messier and it's the start of a selloff," he said.
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