Indian Stocks Catch Chinese Fever, Tank 484 Points

<p><em>The situation in China coupled with the worries about rupee depreciation and the Greece-Eurozone crisis is likely to keep investors on the tenterhooks, says <strong>Paramita Chatterjee</strong></em><br><br>Just when India was coping with the Greek crisis, sentiments were dampened on Wednesday (8 July) following a rout in other Asian markets with over 5 per cent crash in Shanghai.<br><br>Chinese stock markets tumbled on Wednesday sending money managers in India into a tizzy. Sensex tanked 483.97 points to close at 27,687.72, while Nifty closed at 8,363.05 - down 147.75 points or 1.74 per cent. Panic spread and sentiments were down across Asia as China’s benchmark gauge towards its steepest drop in two years.<br><br>Typically, when one market falls, especially that of the size of China, it’s natural for other markets to follow suit. After all, China is currently the second biggest market in terms of market capitalisation, despite a 37 per cent fall in its value.<br><br>In the short term, there will of course be volatility. The situation in China coupled with the worries about rupee depreciation and the Greece-Eurozone crisis is likely to keep investors on the tenterhooks. “Adding to Greece crisis, slowdown in China has now started haunting the markets world over. Selling pressure was witnessed across the board as a result all the sectoral indices closed in red,” said Jayant Manglik, President, Retail Distribution, Religare Securities.<br><br>However, Tarun Sisodia, Director &amp; Head of Research, Anand Rathi Financial Services echoed a different sentiment and said the unfolding events in China are a result of structural problems within China and is unlikely to have a major impact on India going forward. There are certain sectors which may be impacted but all in all it is the local cues that would dictate the trend ahead and for that one should look out for CPI numbers, quarterly results and progress of monsoons, among other things.<br><br>In 2014, the previous calendar year, India’s net trade deficit with China stood at $45 billion with India’s export figures standing at $13 billion. In 2013, India’s net trade deficit was $35 billion, which was approximately a quarter of India’s deficit with all other trading countries.<br><br>In a global scenario, this kind of a steep fall in markets was witnessed by Japan in 1990. In Japan, it started with a credit market and real estate bubble, the first tremors of which were felt in stock market resulting in a crash. That in turn affected banks that were saddled in bad debt. Incidentally, in the late 1980s Japan was considered a power that could rival or even overtake the US like China is considered now! Wondering if China will meet with the same fate as Japan then!</p>