Bears continued to maintain their strangle hold over the bulls and benchmark Sensex plunged below the 25,000-mark to hit a new 15-month low. The prevailing gloomy mood was further precipitated by a Chinese equity markets fall while fresh monsoon deficiency woes coupled with rupee hitting two-year lows triggered wide-spread selling.
Continuing with its downward bias, the 30-share BSE S&P Sensex ended the session at 24,893.81, down 308.09 points, or 1.2 percent from previous close. Gyrating sharply in intra-day trade, the index jumped 185 points in early trade before shedding all its gains to trade lower and crash 350 points to the day's low of 24,851.77. With today's fall, the Sensex has tumbled more than 2,000 points since last week.
The broader 50-share CNX Nifty closed lower at 7,558.80, down 96.25 points, or 1.3 percent.
Market breadth ended extremely weak, with 1,988 stocks declining while just 688 stocks advanced on BSE.
Among other Asian markets, Chinese equity markets, after remaining closed for four days last week, failed to regain lost ground even as policymakers and regulators tried to calm the nerves promising financial market reforms and increased infrastructure spend while government officials suggested the worst of volatility was over.
However, underlining concerns about the health of the world's second largest economy persisted, as Chinese government revised its annual economic growth rate in 2014 to 7.3 percent from the previously released figure of 7.4 percent on Monday, a Reuters report said.
Amid global worries, news of domestic monsoon deficiency likely to be at 82 percent of the long-term average against the earlier estimate of 88 percent added further nervousness among the investors, which are already battling Chinese economic slowdown and US Fed rate hike expectations.
Reacting to the panic situation in the markets, the meteorological department issued a statement saying they are not revising the earlier estimates on monsoon as of now. However, since the statement came post the market hours, the damage was already done to the markets.
The rupee fall also played its part in the equity sell-off, as the domestic currency depreciated 36 paise to 66.82 against the dollar, pushing it to a new 24-month low, raising prospects of extended FII exit from domestic share market.
In addition to last month's record net outflow of over Rs 17,000 crore from domestic equities, foreign institutional investors offloaded shares worth Rs 4,385 crore last week, indicating more pain for the markets in the near term.
Shankar Sharma, global trading strategist at First Global, in an interview withCNBC-TV18, said the the bear market that began in 2008 has only now started taking its real shape. He further said Indian equities are indeed in long-term bear market with cyclical bull rallies thrown in.
Terming the EMs asset class a yesterday story, Sharma says there isn't any real story worth selling. "The EM story was being sold on commodity bull market and consumption fallout of strong economic growth," he says adding the asset class will fail to provide any succour to investors.
G Chokkalingam, founder & managing director, Equinomics Research & Advisory, also asserted that market may fall for another 10 days as deficient monsoon, more economic data from China to be announced this week which could be lower-than-estimates, may further dampen investor sentiment back home.
"My sense is that Sensex may fall by another 400-500 points fall in the near-term and FIIs may offload some more shares before turning net buyers going ahead due to weak global factors even as I believe US Fed may not hike rates this month. I believe India's long-term growth story is still very-much intact and one should consider this falling market as an opportunity to take stock-specific bets," said Chokkalingam.
Several frontline shares came under severe hammering. Shares of Axis Bank tumbled 3.9 percent to Rs 450.55, Vedanta lost 3.6 percent to Rs 89.95, ICICI Bank shed 3.3 eprcent to Rs 249.25, Hindalco declined 3.1 percent to Rs 71.60, Lupin eased 3 percent to Rs 1,804.20 and Dr Reddy's was down 2.8 percent at Rs 3,941.
Other laggards such as BHEL, Coal India, Sun Pharma, NPTC, L&T, SBI, Tata Steel and Gail also ended over 1-2.5 percent lower.
The broader market also witnessed major sell-off, as BSE mid-cap index tumbled 2.2 percent and small-cap index shed 1.8 percent.
Source - First Post