Sensex crashes over 300 pts; realty, auto, cap goods bleed

Moneycontrol Bureau
Live Market Commentary

12:50 pm Rupee expert: Technical analyst Jai Bala of cashthechaos.com says the market was throwing contradictory signals a few weeks ago, with the Indian currency poised to test its all-time low. 
The rupee fell below the key psychological level of 56 to the dollar on Thursday, its lowest level in over 8.5-months, as the dollar rallied on worries about a potentially early end to US monetary stimulus. 12:47 pm Midcap update: The cuts are way deeper across the mid and small cap stocks. Both the indices are down 2 percent each. HDIL (down 9.1 percent), Unitech (down 9 percent) and Crompton Greaves (down 8.2 percent) were hit the most. 12:40 pm Soothing balm: Finance Minister P Chidambaram is trying to soothe Indian market sentiment. He says that US Fed's statement has been misunderstood and there is no need for any kind of nervousness. "India market should watch local situation, not elsewhere," Chidambaram adds. 12:31 pm European markets: European markets are battered too. CAC opens down 2.2 percent while FTSE falls 1.7 percent from its previous close. 12:30 pm Expert advise: Market could drift lower near term, and the correction could get deeper, depending on newsflow from the US, feels UR Bhat of Dalton Capital Advisors. In an interview to CNBC-TV18, he said that foreign institutional investors were not getting good returns from their investments in India, partly due to a weakening rupee, among other factors.
Equity markets globally weakened after the US Federal Reserve said it would stick to its policy of low interest rates and easy liquidity to help revive the US economy. Bhat said the stock market was vulnerable to adverse global news flow and also a weakening rupee. He sees support for Nifty at 5500-5600. 12:25 pm Key gainers: ONGC (down 0.64 percent), TCS (down 0.37 percent), Sun Pharma, HDFC and Dr Reddys Labs are major gaienrs in BSE. 12:20 pm Asian market check: Japan's stock market finished Thursday's session 7 percent lower, in a hugely volatile session which saw the Nikkei gain 2 percent in early trade, only to dive by up to 7 percent late in the session.
Asian stock markets were served a double whammy after HSBC's latest China's flash PMI slipped below the boom-and-bust level of 50 for the first time in seven months and as fears grew that the US Federal Reserve may withdraw its bond buying sooner than expected.
Australia's S&P ASX 200 fell 2 percent to hit a one-month low and the Australian dollar tumbled to a one-year low against the greenback. South Korea's Kospi lost 1 percent and the Shanghai Composite pared earlier losses.
Japan's benchmark index fell to its lowest levels in over a week as investors got spooked by the weak data in China, one of Japan's largest export markets.
The sharp sell-off in equities led investors to seek safety in the Japanese government bond market (JGBs) where yields on the 10-year note fell to 0.880 percent after rising to a one-year high of 0.995 percent earlier in the session. 12:17 pm Losers: SBI (down 4.21 percent), Maruti Suzuki (down 4.15 percent),  BHEL (down 4.13 percent), L&T (down 4.09 percent) and M&M (down 4.02 percent) are major losers in the Sensex. 12:12 pm Bleeding indices: It's a bloodbath on the Dalal Street as most stocks are under heavy selling pressure. BSE Realty index (down 6.9 percent), BSE Capital Goods index (down 4 percent) and BSE Oil & Gas index (down 2.2 percent were badly hurt. All indices are trading in red. 12:10 pm FII view: Investors should get over their obsession with interest rates and focus on the developments in the economy, feels Adrian Mowat of JP Morgan. He said there was unlikely to be any significant change in global liquidity because of the Fed's commitment to quantitative easing. Commodity prices have weakened over the last month, and stocks have gained sharply on hopes that the Fed would start reducing its bond buying programme as the US economy was showing signs of recovery.
According to Mowat, the Fed's stance on continuing with the stimulus is reassuring as a recovery in the US economy would be positive for emerging markets as well.
Mowat said investors should not over react to Bernanke's decision to persist with an easy monetary policy.
Mowat said equity market investors are nervous after a sharp rally over the last month. He, however, would be a buyer at every decline. Full interview here.
Indian equities continued with sell offs in line with global peers as the Nifty slid nearly 2 percent below the 6000 levels. The Sensex plunged 326.47 points to 19735.77, and the Nifty fell 111.30 points to be at 5983.20.
Japan's stock market finished Thursday's session 7 percent lower.  A perfect storm of factors including weak China data, Bernanke confusion, surging Japanese bond yields and a strengthening yen contributed to the moves, analysts said.
The rupee too slumped to 8.5-month low and hit 56 level for the first time since September last year. Rupee depreciated 2 percent this week and 4.1 percent this month. India VIX breach 19 for first time since September 24, 2012.