Mumbai: The Indian equity markets plunged to their lowest levels in the last six months on Monday with the benchmark Sensex receding below the 26,000-point mark and the NSE Nifty crashing below the 8,000 level.
Market observers pointed out that heightened chances of a US rate hike and fears over domestic economic contraction due to the government's demonetisation move spooked investors.
Besides, political bickering over the demonetisation move, depreciation in rupee, continous outflow of foreign funds and impasse between the central and state governments on the contours of the Goods and Services Tax (GST) framework depressed the buying sentiments.
The wider 51-scrip Nifty of the National Stock Exchange (NSE) declined by 145 points, or 1.80 per cent, to 7,929.10 points.
The barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 26,246.70 points, closed at 25,765.14 points -- down by 385.10 points, or 1.47 per cent, from the previous close at 26,150.24 points.
The Sensex touched a high of 26,270.28 points and a low of 25,717.93 points during the intra-day trade.
The BSE market breadth was skewed in favour of the bears -- with 2,223 declines and 408 advances.
During the last eight trade sessions since the demonetisation move was announced (November 9 to 21), the Sensex has lost 1,825.10 points, while the Nifty has dropped 614.45 points.
On Friday, the equity markets closed in the red, with the barometer index slipping by 77.38 points, or 0.30 per cent, whereas the NSE Nifty inched lower by 5.85 points, or 0.07 per cent.
The global and domestic investors were jittery on the prospects of a US rate hike which can potentially lead foreign portfolio investors (FPI) and funds away from emerging markets such as India. It will also dent the business margins of corporate sector, as access to capital from the US will become more expensive.
"FIIs (foreign institutional investors) have been continously pulling out money from the markets. The higher crude oil prices on expectations of a production cut in December did not bring any respite to the markets," Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services, told IANS.
In terms of investments, provisional data with exchanges showed that the FIIs sold stocks worth Rs 1,310.82 crore, whereas the domestic institutional investors (DIIs) purchased scrips worth Rs 1,211.01 crore.
"The surprise outcome of the US elections and fears of a probable US rate hike will continue to hamper market sentiments," James said.
In addition, the Indian rupee weakened by two paise to 68.16 against a US dollar from its previous close of 68.14 to a greenback.
"We expect the USD/INR to continue its uptrend target of 68.35," Astha Jain, Senior Research Analyst at Hem Securities, told IANS.
According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, banking stocks witnessed heavy selling pressure throughout the session, while pharma, auto, oil-gas, aviation, media-entertainment and FMCG stocks traded on a lower note.
Sector-wise, all 19 sub-indices of the BSE ended in the red.
The S&P BSE automobile index plummeted by 644.70 points, the banking index plunged by 628.86 points, and the metal index declined by 121.58 points.
Major Sensex gainers during Monday's trade were: Wipro, up 1.04 per cent at Rs 441.65; Tata Consultancy Services (TCS), up 0.44 per cent at Rs 2,132.55; Sun Pharmaceuticals, up 0.36 per cent at Rs 690.75; Reliance Industries, up 0.34 per cent at Rs 990.90; and ONGC, up 0.15 per cent at Rs 275.70.
Major Sensex losers were: State Bank of India (SBI), down 6.51 per cent at Rs 257.75; Power Grid, down 3.57 per cent at Rs 185.05; Tata Steel, down 3.52 per cent at Rs 371.55; Maruti Suzuki, down 3.46 per cent at Rs 4,788.35; and Mahindra and Mahindra (M&M), down 3.16 per cent at Rs 1,199.85.
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