Nifty closes below 4400 on weak global cues

The Sensex retreated on the back of selling in oil & gas, metal, cement, power, technology, FMCG and select banking stocks. It closed well below the 15,000 mark while the Nifty below the 4,400 level. The sell-off across the globe was the reason behind today's fall.

The culprit behind Monday's 4% fall, China's Shanghai remained the starting point for selling across the globe today as well. It plunged another 4.3%, to close at 2,785.59 on the back of weak earnings and policy disappointment. There were also some concerns over lending as banks restrain lending which will slowdown the economic growth. Shanghai fell nearly 20% from August 4.

Speaking on concerns that the Chinese central bank may tighten liquidity ahead, Aadil Ebrahim, Investment Manager, Bowen Capital Management said it made sense for the regulator to reduce bank lending. ''If they had not reduced their bank lending, the whole world would be up in arms saying that the system is not sustainable, you are going to have a massive bust,'' he said. The Chinese government had, in a bid to boost bank lending, had forced corporates to borrow money even if they didn't need it, he said, adding, ''So, they are sitting on cash, earning 1-2%. Obviously the money is going to flow back into the stock market. So, it probably explains why the market ran up for the first six months, and as lending slows down the market's going to run back down. I don't think it has any bearing on the rest of the world.'' Ebrahim said that Chinese market could possibly correct a further 15–20% from current levels.

In Asian markets, Straits Times and Hang Seng fell 1.7% each. Jakarta lost 2.5% and Nikkei was down 0.8%. Kospi and Taiwan ended flat.

China's fourth largest listed steelmaker Maanshan Steel plunged 7.5% in Shanghai after reporting losses. Among others, Citic Securities, China Vanke fell 5.5-8%. Commodities also slipped. Base metals declined 1-4% and US dollar Index turned back above 79. Investors were disappointed because regulators failed to take any concrete steps to support the market. Crude also declined USD 1.5/bbl to USD 70/bbl. At the time of closing of Indian equities, European markets and US index futures were down 0.9-1.2%.

Unwinding was also another reason that pulled down the markets. The markets tried to recover around 14-15 hours IST but that also sold into again. The 30-share BSE Sensex fell 225.62 points or 1.5%, to settle at 14,809.64, after hitting a low of 14,684.45. The 50-share NSE Nifty shed 64.80 points or 1.45%, to close at 4394.10, after seeing a day's low of 4353.45. Both indices touched Monday's closing value during the day. The broader indices also followed the same trend but did not fall in line with benchmark indices; the BSE Midcap lost 1.1% and Smallcap Index down 0.5%.