Sensex dives 651 pts on panic selling; ITC, ICICI down 5%

Moneycontrol Bureau

There was complete chaos in market in the last hour of trade Tuesday with the equity benchmarks falling 4 percent on downgrade fears, rupee depreciation and Syria tensions.

There was a statement from the Russian defence ministry that it detected two ballistic "objects" that were fired towards the eastern Mediterranean from the central part of the sea that spooked the market.

However, Israel clarified that it carried out joint missile test with US in Mediterranean and tested 'Anchor' target missile used in anti-missile system.

The Sensex snapped four-day winning streak today, falling 651.47 points or 3.45 percent to close at 18234.66, and the Nifty lost 213.75 points or 3.85 percent at 5337. Declining shares outnumbered advancing ones by 1465 to 795 on the Bombay Stock Exchange.

After such a heavy fall due to continuing global and local issues, experts are finding it difficult to see the real bottom for the market now. They expect further correction going ahead.

Dipan Mehta, Member BSE & NSE says the bottom level is hard to predict as long as this negative news flow continues.

According to him, an action on significant increase in diesel prices or exports could change the direction of the market.

Next two-three weeks are very important for the market and everyone should watch out for RBI policy in September. In the meantime, one should brace for further corrections, Mehta adds.

Goldman Sachs also joined the series of rating agencies downgrade along with JP Morgan & HSBC while Standard & Poor’s sent a warning of downgrade.

Goldman Sachs sharply cut India's GDP forecast to 4 percent from 6 percent for FY14 and to 5.4 percent from 6.8 percent for FY15, reports Reuters.

Goldman says the downgrade reflects the more difficult external funding conditions for Asia as markets increasingly anticipate Fed tapering and eventual exit from unconventional monetary policies.

The investment bank has also put out more bearish forecasts for the rupee, expecting the currency to trade at 70 in three months, at 72 in six months and back to 70 in 12 months.

Indian rupee breached the 68-mark intraday today, but it managed to recover a bit from day's low in late trade. It was down 163 paise to close at 67.63 against the US dollar. It had touched its record low of 68.80 per dollar on August 28.

Banks were hit quite badly as BSE Bankex cracked 5 percent followed by Realty, FMCG, Oil & Gas, Capital Goods and Power indices with 3-4 percent losses.

Oil & gas explorer Reliance Industries and two-wheeler major Hero MotoCorp were top losers, falling 6 percent each.

Shares of ITC, ICICI Bank, HDFC, HDFC Bank, Larsen & Toubro, Bharti Airtel and Hindalco Industries were down 4-5 percent while Coal India gained more than 1 percent on buyback buzz.