The market caught in bear grip on Tuesday as equity benchmarks shed 2 percent in last couple of hours of trade following sharp fall in European markets. Banks, infrastructure and metals stocks dragged.
The 30-share BSE Sensex plunged 541.14 points to 25651.84 and the 50-share NSE Nifty fell 165.10 points to 7812 after hitting day’s low of 7787.75. The loss in broader markets was less compared to benchmarks; the BSE Midcap and Smallcap indices declined 1.6 percent and 1.2 percent, respectively. Nearly two shares declined for every share advancing on the Bombay Stock Exchange.
Foreign insitutional investors have net sold Rs 1,052.24 crore worth of equity shares today, as per provisional data available on exchange.
Analysts expect Indian equities to be rangebound in short-to-medium term. According to them, uncertainty over the timing of Fed rate hike and China’s economic outlook may have dampened sentiment globally.
Gautam Trivedi of Religare Capital Market feels FIIs are not inclined to put more money into India now. He expects the market to be rangebound between now and end of 2015.
The Fed’s refusal to hike interest rates despite enough supporting economic data has confused the market into thinking that maybe Fed knows something market participants don’t, Robert Parker of Credit Suisse Asset Management said. However, he is confident that this negative move by markets is not more than a three month bear market.
Volatility returned to haunt global markets again. European markets like France’s CAC, Germany’s DAX and Britain’s FTSE crashed 2-3 percent. Volkswagen shares plunged 20 percent as the aftermath of emissions scandal unfolded. South Korea said it will initiate a probe into the German car makers diesel vehicles while French finance minister Michel Sapin called for a Europe-wide probe that will cover other carmakers. Dow Jones futures fell 225 points, which pointed towards weak US opening today (at 16 hours IST).
Back home, the rupee closed at 65.88 a dollar, down 16 paise compared to 65.72 in previous session.
Meanwhile, after giving relief to FIIs over MAT, the finance ministry is now likely to refer high profile tax cases with respect to indirect transfers to a special high level committee for a speedy resolution. Justice Shah panel may be asked to look at retrospective taxation on indirect transfers.
In stock action, Bank Nifty, CNX Infra and CNX Metal indices were down 3-4 percent.
Hindalco Industries and Vedanta were top losers on Sensex, falling more than 6 percent. HDFC, L&T, Reliance Industries, ICICI Bank, HDFC Bank, Tata Motors, Axis Bank, SBI, NTPC and Coal India were other prominent losers, down 2-5 percent.
However, Infosys closed flat with a positive bias. The country’s second largest software services exporter has bagged Rs 1,400 crore worth GST (goods and services tax) contract and signed 3-year agreement with US-based TOMS Shoes to develop its digital platform.
Auto ancillaries were also under pressure. Motherson Sumi tanked nearly 8 percent after one its biggest clients Volkswagen has been accused of cheating on diesel emission tests in US. Amtek Auto cracked 11.5 percent as the company defaulted on Rs 800-crore bond payment which was due for repayment on Sunday.