Sensex, Nifty Fall To Over One-year Low

(RTTNews) - The Indian markets fell sharply on Wednesday as fears of a China-led global economic slowdown and uncertainty surrounding the Federal Reserve's first interest-rate hike kept investors on the sidelines.

International Monetary Fund (IMF) Christine Lagarde has said that global growth is likely to be weaker than expected this year due to sluggish recovery in advanced economies and a further slowdown in emerging economies.

However, allaying concerns about domestic growth, India's Chief Economic Advisor Arvind Subramanian said that the economy is moving in the right direction and the government remains confident of meeting its 8 percent GDP growth target for the current fiscal year. As India is a net importer, the slowdown in China is an historic opportunity to relaunch growth in India, he added.

The benchmark index BSE Sensex rose as much as 243 points to hit a high of 25,939.37 in early trade after the government said it would come out with requisite amendments to the Income Tax Act in the next Budget in February to waive imposition of a minimum alternate tax (MAT) on foreign investors for periods prior to April 1, 2015.

With early gains fading quickly, the Sensex reversed direction to end the session near its day's low at 25,453.56, down 242.88 points or 0.95 percent from its previous close and its lowest level in over a year. The broader Nifty index fell 68.85 points or 0.88 percent to finish at 7,717.

Banking stocks were hit hard after the RBI unveiled the draft guidelines for its proposed plan to bring in uniformity among banks for calculation of base rate and for effective transmission of policy rates. Bank of Baroda, ICICI Bank, Axis Bank, SBI and PNB lost 2-4 percent.

Drug major Cipla dropped 1.8 percent after announcing management changes. Hero MotoCorp tumbled 2.2 percent on reporting a 14 percent decline in August sales. United Breweries plummeted 4.4 percent after denying media reports that Heineken NV has offered to buy out additional stake in the company.

Oil & gas explorers gained ground after the government approved the auction of 69 small and marginal oil and gas fields surrendered by state explorers. While Jindal Drilling shares jumped 20 percent, Aban Offshore rallied 3 percent and Hindustan Oil Exploration jumped 7 percent.

DLF advanced 4.4 percent after the realty firm formed a joint venture with Singapore's sovereign wealth fund GIC for developing two residential projects in Central Delhi.

IT stocks such as TCS and Tech Mahindra climbed 2-5 percent, cement manufacturers ACC, Ambuja Cement and UltraTech rose about 2 percent each and telecom major Idea Cellular gained 3.2 percent.

TVS Motor Company rallied 2.2 percent on reporting a marginal rise in August sales. Bank of Maharashtra gained 0.9 percent on reports of capital infusion by the government.

Steel pipes manufacturer Welspun Corp gained 1.7 percent on fund raising reports. Suven Life Sciences added 0.8 percent after commencing phase 1 clinical trial of NCE SUVN-D4010 in the U.S.

Elsewhere, Asian stocks steadied as Chinese stocks rebounded from an earlier sharp sell-off and futures on the Dow Jones Industrial Average and the Standard & Poor's 500 Index rebounded after a bruising sell-off in global stocks the previous day.

However, gains remained muted and most regional markets ended in the red ahead of a report on U.S. private sector jobs due tonight and the more comprehensive non-farm payrolls figures due on Friday, which could influence the Federal Reserve's decision on whether or not to raise short-term interest rates at the highly anticipated policy meeting on Sept 16-17.

The European markets erased early gains to extend losses for the third day, with energy stocks succumbing to selling pressure as oil prices fell below $45 a barrel.