Sensex slips 235 points on China, SBI jitters...

MUMBAI: Investors on Dalal Street turned jittery on Tuesday after China unexpectedly devalued its currency sending metal and tyre stocks into a tailspin. The mood turned gloomier after India’s largest bank SBI reported disappointing quarterly earnings, which led Sensex to slip below its crucial 200-day moving average.

Traders initiated fresh short positions in metal stocks such as Tata Steel, Hindalco and Vedanta, and investors dumped tyre stocks such as Apollo Tyres and JK Tyre on fears of increasing supplies from Chinese manufactures.

Sensex dropped 235 points, or 0.84%, to close at 27,866, below its 200-DMA of 27,983 and the psychological level of 28,000. Nifty declined 63 points, or 0.74%, to end at 8,462, below the crucial level of 8,500 at a two-week low. BSE Midcap and BSE Small Cap wakened 0.46% and 1.13%, respectively.

“The broader markets won’t see much impact from yuan devaluation, instead the manufacturing sector will benefit from lower commodity prices from the Chinese slowdown,” said Nirakar Pradhan, chief investment officer of Future Generali India Life Insurance. China unexpectedly announced on Tuesday that it’s planning to devalue its local currency yuan by 2% against the US dollar following a slump in trade, triggering the currency’s biggest single-day decline in a decade. The rupee’s deprecation against the dollar also soured market sentiments; the currency dropped 34 paise to a twoweek low at 64.21.

“Steel, textile, and auto component companies may face tougher competition. However, this may hold true only if the Indian rupee continues to hold itself against the US dollar, and yuan is devalued further,” said Sahil Kapoor, chief market strategist at Edelweiss.

Market participants were disappointed by the SBI results, leading to selling pressure in banking stocks, including ICICI Bank and HDFC Bank, which were the major contributors to Tuesday’s fall.