BSE Sensex drops 500 pts in 2 days; ends below 200 DMA

It was carnage on Dalal Street with BSE Sensex shedding over 500 points in two trading sessions. Political uncertainty, ETF funds and FII selling and ever-worsening economic data are the key triggers for the downfall.

The Sensex closed at 18509, down 292 points or 1.55 percent and the Nifty ended at 5574, down 98 points or 1.73 percent.

The benchmark indices have closed below their 200-Day Moving Averages for first time since August 2012, which is a bearish sign.

A fall below this average indicates breach of support and market participants consider closing their long positions inferring the long term trend has turned bearish. 33 stocks in the Nifty are trading well below its 200 DMA.

Foreign funds sold shares worth 3.68 billion rupees on Wednesday, provisional exchange data shows. FIIs continue to be big buyers of Indian stocks in 2013, having bought over $10 billion. A sharp sell-off by FIIs can drag market to lower levels.

Realty stocks were biggest losers of the day. BSE realty index ends the day with losses of 3.24 percent. DLF loses 4 percent, Sobha Developers down 5.5 percent, HDIL down 5.3 percent.

IT stocks took a u-turn in trade today. After gaining 24 percent in the March quarter, the index was down 2.45 percent today.

Jaiprakash Associates, UltraTechCement, HCL Tech, Jindal Steel and Reliance Infra were top losers on the Nifty.

Coal India, Dr Reddys Labs, HUL, Maruti Suzuki, M&M, Tata Motors and NMDC ended in green.  43 stocks out of Nifty 50 closed in red.

“Slowdown in China and fall in commodity prices are among the major concerns for the Indian markets. The political uncertainty will continue to impact market moves and with talks of an early election on the cards, market may turn cautious in the near term. We would advice traders and investors to remain cautious,” says Amar Ambani, Head of Research, IIFL.

India Inc today was impressed by Congress leader Rahul Gandhi's maiden interaction with corporate leaders saying he came across as a sincere leader and this can form the basis for future engagement with the industry.