The domestic equity benchmark BSE Sensex was down by around 770 points while the broader NSE Nifty fell by over 225 points.
The financial markets plummeted on Tuesday after GDP data showed that growth had slipped to an over 6-year low of 5 per cent in the June quarter of 2019-20. The growth of eight core industries also dropped to 2.1 per cent in July, Agencies report.
Tuesday was the first day of business after the poor GDP and core sector growth numbers over the last few days. The markets were closed on Monday for Ganesh Chaturthi.
The domestic equity benchmark BSE Sensex was down by around 770 points while the broader NSE Nifty fell by over 225 points.In the Sensex pack, the top losers were ICICI Bank, ONGC, HDFC Vedanta, Tata Motors. IT stocks were among the gainers on the NSE index, bolstered by the weak rupee. Tech Mahindra Ltd climbed 3.4% to a near 10-week high.The rupee depreciated 85 paise against its previous close to trade at 72.27 in afternoon session
The GDP numbers, released on Friday after market hours, showed that growth was at 5%, a six-year low. The growth numbers were affected by slow manufacturing output among other factors. The drop in the growth of eight core industries was due to contraction in coal, crude oil and natural gas production, according to government data released on Monday.
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India, Asia’s third largest economy, also witnessed a decline in manufacturing activity in August. IHS Markit India Manufacturing Purchasing Managers’ Index showed that the manufacturing sector growed at its slowest pace in last 15 months.
Public sector bank stocks, led by Corporation Bank and Punjab National Bank, tumbled up to 9.3 per cent (intra-day) after the government, on Friday, announced the merger of 10 state-run lenders into four.
On 23 August, finance minister Nirmala Sitharaman announced a slew of measures to boost economic growth, including a plan to provide some stimulus to the automobile sector.The government also announced mergers of 10 public sector banks last week . Finance minister Nirmala Sitharaman announced the mega mergers with an aim to unleash greater efficiencies in the banking sector and realising government’s $5 trillion economy dream.
Chief economic adviser KV Subramanian said the GDP slowdown was due to a mix of domestic and global factors and assured that India would be on a high-growth path “very soon”. “The government is alive to the situation and has taken several measures including mega merger of banks,” he said.