24/08/2015 10:43 AM IST | Updated 15/07/2016 8:25 AM IST

Indian Stock Market Down 1,700 Points, Rupee Sinks To 2-Year Low As China Rout Spreads

Spencer Platt via Getty Images
NEW YORK, NY - AUGUST 21: Traders work on the floor of the New York Stock Exchange (NYSE) on August 21, 2015 in New York City. The Dow fell over 150 points in morning trading as global markets continue to react to economic events in China. (Photo by Spencer Platt/Getty Images)

India's stock markets slumped the most since 2008 as a rout in Chinese equities sparked widespread unrest in global financial markets.

The benchmark BSE Sensex crashed nearly six percent at close in Mumbai, wiping out more than Rs 7 lakh crore worth of investors' wealth.

That compared with a 4.4 percent fall in the MSCI Asia-Pacific index of shares excluding Japan. The rupee plunged 0.9 percent to fall below the Rs 66 level against the dollar for the first time in almost two years in opening trade today on sustained capital outflows even as the US currency weakened overseas.

“We are suffering from the global selloff as well as from the government not offering a new solution or support,” said Ajay Srivastava, managing director of Dimensions Consulting Pvt., in an interview with Bloomberg TV India. Reserve bank governor Raghuram Rajan said in a conference today that central banks should avoid giving “booster shots” to stock markets.

Bourses from Japan to Malaysia were hit hard as Chinese stocks plummeted immediately after the open on Monday. That overrode positive sentiment over new rules implemented over the weekend in China that allow pension funds to invest in the stock market. “The news on pension funds over the weekend was positive, but not having the expected required-reserve ratio cut or any other larger measure seems to have disappointed investors,” said Gerry Alfonso, a Shanghai-based trader at Shenwan Hongyuan Group Co.

There was speculation that China will cut bank reserve ratios but that did not happen, fuelling a larger fall in stocks.

"The market is in a downtrend. There's no good news, stocks are still expensive, and there's no fresh money coming in," said Qi Yifeng, analyst at consultancy CEBM.

The MSCI Asia Pacific index was down to a two-year low after U.S. index futures showed the commodities slump might worsen. China's stocks plunged the most since 2007, on heightened concerns that the slowdown in the world's second-largest economy is worse than expected.

Among today's losers were Vedanta Ltd., the largest copper producer, which slumped 12.19 percent in intra-day trade. Tata Steel plunged 11.7 percent, and Oil & Natural Gas Corp., the nation's largest gas explorer, slumped 10.86 percent. Among other blue chips, Reliance was down 6.88 percent, and State Bank of India, the nation's biggest lender, crashed 7.01 percent, dragging down other banking stocks. Tata Motors, maker of Jaguar Land Rover, was heading for its lowest close since in two years.

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