Bloodbath On Dalal Street; Sensex Plunges 1600 Points After China Rout

(RTTNews) - The Indian markets joined a global selloff on Monday as Chinese shares continued their sharp fall on growing concerns that the world's second largest economy is much weaker than suspected and that the country's central bank would move to weaken its currency over time to boost sagging exports.

China's benchmark Shanghai Composite index plunged 8.5 percent to hit a five-month low even as Beijing allowed its main state pension fund to invest up to 30 percent of its net assets in domestically-listed shares.

As concerns over slowing growth in China spurred panic selling across the Asia-Pacific region, the benchmark indexes in Australia, Hong Kong, Indonesia, Japan, New Zealand, Singapore and Taiwan fell 3-5 percent.

Panic selling gripped European stock markets as well after the major U.S. averages suffered their worst losses in four years last week. The German DAX, France's CAC 40 index and the U.K.'s FTSE 100 all were down about 3 percent each, falling to multi-month lows as the rout in Chinese equity markets accelerated.

Closer home, the benchmark index BSE Sensex suffered its biggest intra-day fall in seven years, hitting as low as 25,624.72 in intraday trading before recouping some of its loss to end the session down 1,624.51 points or 5.94 percent at 25,741.56.

The broader Nifty index plummeted 490.95 points or 5.92 percent to close at 7,809, marking its biggest single-day loss since January 7, 2009. The Nifty index hit as low as 7,769.40, its lowest level since October 17, 2014 early in the day. The BSE mid-cap index lost 7.7 percent and the small-cap index retreated 8.8 percent.

The rupee plunged to 66.67 against the greenback in the afternoon, its lowest level since September 2013, even as the dollar slid against the euro and the yen on growing expectations that the Federal Reserve could delay raising interest rates till the very end of 2015.

In a bid to assuage concerns of investors, RBI Governor Raghuram Rajan today said the central bank will not hesitate to use foreign exchange reserves to reduce currency volatility. Dr Rajan noted that India's macro-economic problems were "under control" and the currency has fared better than other emerging-market currencies versus the dollar.

Separately, speaking at an annual conference in New Delhi, Finance Minister Arun Jaitley said that the Indian economy is reviving and the current global market turmoil will have at least some transient impact on India. He also said that the government will stand by its growth projections for the fiscal made at the beginning of the year.

Among the worst performers, Bajaj Auto, ICICI Bank, Reliance Industries, Yes Bank, ONGC, PNB, Cairn India, Tata Steel, GAIL and Vedanta slumped 9-15 percent.