The Sensex ended at its lowest level in more than a year, led by banking stocks. (PTI)

Indian stocks fell more than 2% on Tuesday as foreign institutions continued to pull out amid growing evidence of a slowdown in China and warnings bells over global economic growth this year.

IMF chief Christine Lagarde warned that global growth will be weaker than previously expected and that emerging economies should be alert to potential shockwaves from China’s slowdown.

Lagarde said she feared a ‘bumpy’ ride and warned that global growth was weaker than hoped, as China’s manufacturing shrinks at fastest rate since 2012. The IMF chief also told an audience in Indonesia that Asian economies could continue to lose momentum following recent turmoil on global markets, which have been shaken by fears over China’s economic outlook.

The Sensex ended at its lowest level in more than a year, led by banking stocks. The gauge of top-30 companies ended at 25,696.44, down 586.65 points or 2.23%. The Nifty lost 185.45 points, or 2.33%, to settle at 7,785.85.

Saurabh Mukherjea, CEO, institutional equities, Ambit Capital, said Indian stock markets stand exposed amid a high likelihood of the Chinese central bank embarking on a continued devaluation of the yuan.

“Indian products losing their competitiveness to their Chinese counterparts; and rising risks to India’s $0.5 trillion of foreign currency debt. Such a scenario could be a catalyst for more pullbacks in the Sensex with the trailing P/E multiple likely to drop to 14x (as seen in the Lehman crises), implying a Sensex level of 22,000,” Mukherjea added.

Foreign portfolio investors (FPIs) sold equities of $102 million on Tuesday, provisional data from the stock exchanges showed. FPIs have sold in the last 21 out of 26 sessions as foreigners pulled out record quantum of money in August since October 2008.

Morgan Stanley trimmed its year-end Sensex target, following similar moves by other Indian and foreign firms last week. The American investment bank on Tuesday reduced its Sensex target to 28,800, with risks of a further decline to 22,800.

In Asia, Japanese main stock average – the Nikkei 225 – ended down nearly 4% after data showed Japanese investments in new plant and equipment dropped because of concerns about demand from China.

Shares in mainland China fell 1.3%. In Hong Kong, stocks fell more than 2% after Chinese manufacturing showed further signs of weakness, adding to evidence of a massive slowdown in the world’s second biggest economy. Stocks in other Asian economies like South Korea, Indonesia, Singapore, Taiwan, and Thailand fell 1-2% each.

Major European indices were down 2-3% following the double-whammy from slowdown in China’s and Europe’s manufacturing growth. Manufacturing PMI growth in major western Europe such as Spain, Germany, Italy, Austria, France, Netherlands, Ireland, and Greece fell to multi-month lows. US futures were down 2%, extending losses in what is the worst months since 2012.

Back home, all sectoral indices ended with deep cuts on the back of domestic and global factors. Market breadth was weak as 29 of the 30 Sensex companies declined. In all, 2,122 shares ended weak against 574 stocks that ended positive on the BSE. Economists are still perplexed by India’s GDP, as economic growth in Asia’s third-biggest economy slowed to 7% in April-June, down from 7.5% the previous quarter.

Banking stocks were the biggest losers. Analysts linked the selloff in banking stocks to the sharp 35-bps base rate cut announced by HDFC Bank on Monday, which could hurt net interest margins of other lenders. HDFC Bank has the lowest base rate among big lenders after Monday’s cut.

HDFC Bank shares fell 3%, while Axis Bank fell more than 5%. SBI, the country’s largest lender lost 3.25%, while state-owned Punjab National Bank plunged more than 7%.

Bloomberg data showed that PSU banks saw their valuations dip to new lows. On the back of a 4.5% fall in the CNX PSU Bank index, the price-to-book-value ratio (PBV) of the index declined to its lowest since February 2013.

Bank of India, Canara Bank and Oriental bank of Commerce, which lost 5%-7% of their value on Tuesday, traded at their lowest PBV in seven years in the range of 0.27 to 0.34. Even Indian Overseas Bank, IDBI bank and Allahabad Bank that traded at 0.26 to 0.32 times their book values stood near their August 2013 lows.

Private sector banks, meanwhile, continue to do better with majors like HDFC Bank, Indusind Bank and Kotak Mahindra Bank nearly four times their respective book values despite falling 5%-8% of their share values since market peak of January 2015.

The IPO of Prabhat Dairy was extended by three days as the issue failed to get fully subscribed on Tuesday — the final day of offering.

The issue will now close on September 4 and the price band has been revised to R115-126  — from R140-147. The total issue size has been revised to R485.22 crore from R516 crore. However, the size of fresh issue — R300 crore — has not been changed.

The issue was subscribed 0.28 times at 5 pm IST, stock exchange data showed. The non-institutional category comprising high HNIs gave it a miss. The HNI book was subscribed less than 0.01 times. HNIs bid about 6,120 shares against 54.61 lakh reserved.

Qualified institutional buyers bid for 67.85 lakh shares against 182.061 lakh reserved. Retail investors, whose investment should not exceed a total R2 lakh as per Sebi rules bid for 32.93 lakh shares against 1.27 crore on offer.

The retail book was subscribed 0.26 times.

The company plans to use R185 crore out of the IPO proceeds to repay existing debts.

Incorporated in 1998 as a liquid milk marketing company, Prabhat has graduated into a full-fledged dairy company.

The company has two production facilities in Maharashtra, at Shrirampur and Navi Mumbai, with a total milk processing capacity of 1.5 million litre and caters to customers in Maharashtra, Gujarat and Madhya Pradesh.
Sadbhav subscribed 0.2 times on day 2

Sadbhav Infrastructure’s public offering was subscribed 0.2 times on day two of the three-day IPO, stock exchanges data showed on Tuesday.

HNIs  subscribed 31.57 lakh shares against 69.71 lakh reserved for the category whereas qualified institutional buyers bid for 9.71 lakh shares against 1.44 crore reserved for them.

On Friday, the company had raised R210 crore in a pre-IPO placement to anchor investors.

It issued a little more than 2 crore shares to anchor investors, including Nomura, Morgan Stanley,HDFC Mutual Fund, Tata Mutual Fund,  Amansa and Tata AIA Life.

The company plans to raise R425 crore through a fresh issue of equity shares and an offer for sale of up to 32.36 lakh equity shares by existing investors, including the anchor investor portion.

The price band has been fixed at R100-103.

The IPO proceeds will be utilised for repayment of loans, equity investment and advancing of subordinate debt to its subsidiary Shreenathji Udaipur Tollway (SUTPL) and part-financing of the SUTPL project.

A sharp sell-off in the stock market wiped out over Rs 2 lakh crore from investors’ wealth today as the benchmark Sensex plummeted 587 points following weak domestic and global macroeconomic data.

Total investor wealth of BSE-listed companies tumbled by Rs 2,02,654.47 crore to Rs 96,25,276 crore.

The 30-share index plunged 586.65 points or 2.23 per cent to settle at 25,696.44. Intra-day, the blue-chip index crashed 703.21 points to 25,579.88.

“Tracking weak cues from both domestic and global front, equity benchmarks tanked today. Mainly, sentiments were downbeat in reaction to weak macro-economic data of GDP. Adding to that, negativity on global front pushed benchmarks lower as the day progressed,” said Jayant Manglik, President, Retail Distribution, Religare Securities Ltd.

A government data yesterday said that domestic growth had slowed down to 7 per cent in the June quarter from 7.5 per cent in the previous quarter, while a private survey today showed that China factory output shrank to a three-year low.

Among the 30-Sensex stocks, 29 ended with losses led by AXIS Bank, Hindalco Industries, Tata Steel and BHEL.

Sun Pharmaceutical was the only gainer with 0.34 per cent rise.

“Country’s key macro-data with slower GDP growth of April-June quarter, subdued Asian cues amid weakness in China’s economy, loomed over the trading sentiments,” said Vikas Singhania, Executive Director, Trade Smart Online.

At BSE, 2,093 stocks declined, while 595 advanced and 86 remained unchanged.

Shares of Sun Pharmaceutical Industries gained over 1.5 per cent in the morning trade on Tuesday after the company announced that it has successfully completed the acquisition of Opiates business in Australia from GSK. (Photo: Reuters)

Shares of Sun Pharmaceutical Industries gained over 1.5 per cent in the morning trade on Tuesday after the company announced that it has successfully completed the acquisition of Opiates business in Australia from GSK. The announcement was made before market hours on Tuesday.

At 11.06 pm, the share price of Sun Pharmaceutical was trading 1.73 per cent higher at Rs 913.20. It opened at Rs 889 and had touched a high and low of Rs 915.30 and 883.40, respectively, in trade so far. The BSE Sensex was down 181.71 points at 26,101.38.

In a BSE filing, the company said, “This acquisition fortifies Sun Pharma’s global position with two Opiates manufacturing facilities in Port Fairy & Latrobe (both in Australia) complementing its current API manufacturing footprint globally.”

Sun Pharma now offers a rich basket of Opiates product line in addition to a large API portfolio and dosage formulations covering a broad range of chronic and acute prescription drugs. The acquisition also brings a specialized team to drive business growth.

For the quarter ended June 2015, the company reported a consolidated net profit of Rs 478.96 crore, down 65.56 per cent against Rs 1,390.51 crore in the corresponding quarter a year ago.

(Photo: PTI)

10.25 am: BSE Bankex index fell over 1.5 per cent. HDFC Bank cuts base rate by 35 basis points to 9.35 per cent from September 1. According to analysts, After this cut most banks base rates are 35-65 basis points higher than HDFC Bank and they will have to take some hit on NIMs if they match it.

10.18 am: The market breadth indicating the overall health of the market was weak. Index heavyweights HDFC and Hindalco were down over 2 per cent. Sensex was down 225 points at 26,057.12

9.23 am: Sensex was down 214.40 points at 26,068. Nifty was down 66 points at 7,905.25.

Domestic stock market opened in red on Tuesday on the back of slowdown in GDP growth rate in Q1 June 2015 and weak Asian markets. The BSE Sensex and NSE Nifty opened 156.05 points and 63.35 points lower at 26,127 and 7,907.95, respectively.

Monday’s government data showed gross domestic product expanded at an annual 7 per cent rate in the April-June quarter, matching China, but slower than provisional growth of 7.5 per cent in the previous quarter.

The BSE Sensex on Monday closed 109.29 points, or 0.41 per cent lower at 26,283.09. NSE Nifty closed 30.65 points, or 0.38 per cent, down at 7971.30.

Global Markets

Asian shares fell on Tuesday and the dollar struggled after twin surveys showed China’s manufacturing sector in the grip of its worst slump in several years, raising fresh fears about the health of its economy.

China’s official Purchasing Managers’ Index (PMI) fell to 49.7 in August from the previous month’s reading of 50.0, the weakest showing in three years.

Asian peers, Hang Seng, Nikkei 225 and Shanghai were also down 0.46 per cent, 2.38 per cent and 2.29 per cent at 21,571.57, 18440.28 and 3137.60, respectively.

(With inputs from Agencies)