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Bears gradually tightened their grip on Dalal Street on Wednesday as the Sensex plunged more than 600 points intraday and the Nifty closed below 10,900 levels. Weakening rupee and rising crude oil prices raised possibility of another rate hike in Monetary Policy Committee's three-day meeting which began today.
All sectoral indices ended in the red barring Metals that gained 1.8 percent. Bank, Auto, FMCG, IT and Financial Service indices were down between 1 percent and 3 percent.
The 30-share BSE Sensex lost 550.51 points or 1.51 percent to 35,975.63 but the market breadth remained positive throughout the session. About 1,451 shares advanced against 1,187 declining shares on the BSE due to buying in select smallcaps. The BSE Smallcap index gained 0.2 percent whereas Midcap lost 1.1 percent.
"Despite government's decisive move about IL&FS, the markets are under relentless pressure on the back of crude oil touching multi-year highs and rupee making fresh all-time lows. The precarious positioning of international macros simply not letting the pressure-off the market," Jagannadham Thunuguntla, Senior VP and Head of Research (Wealth), Centrum Broking told Moneycontrol.
He feels the markets are eagerly awaiting decisive relief measures from government to provide confidence to Indian Rupee, which is making fresh all-time lows almost on daily basis.
The 50-share NSE Nifty slipped 150 points or 1.36 percent to close at 10,858.30 but managed to hold its crucial support of 10,850 levels.
"In forthcoming sessions if Nifty50 doesn’t stabilise around its 200 Day EMA of 10,785 levels then traders investors should prepare themselves to see the index heading towards 10,557 levels," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
The Indian rupee breached 73/$ for the first time ever to hit a record low of 73.41/$ on strong demand for the American currency from importers amid rising global oil prices and unabated capital outflows. The fall in equity markets also hit sentiment. The currency recovered a bit from its lows but is still trading below 73 levels.
"While RBI's action stabilised liquidity conditions in the market, I reckon the RBI might let the currency go down further. With oil steaming up and more liquidity injection from the central bank will lead to some fall in rupee," Saurabh Mukherjea, Founder, Marcellus Investment Managers said.
Brent crude futures, the international benchmark for oil prices, continued to hover around $85 a barrel, the highest level seen since November 2014 on rising expectations of supply concerns once US sanctions on Iranian oil come into effect from next month.
The last-man-standing industries such as large cap autos and IT also started melting, almost leaving no place for markets to hide. Automobile stocks were battered as fears of margin compression came to fore.
Mahindra & Mahindra and Eicher Motors were biggest losers among Nifty50 stocks, falling more than 6 percent. Maruti Suzuki was down 3 percent on recall of Super Carry vehicles.
Bharti Infratel also lost 6 percent on likely weak earnings in Q2.
TCS, Reliance Industries, Infosys, ICICI Bank, Axis Bank and Kotak Mahindra Bank were other major losers, down 2-4 percent.
Metal stocks especially aluminum producers were in limelight today after world's largest alumina refinery Norsk Hydro closure buoyed aluminum players. Nalco surged 11.5 percent and Hindalco rallied 4.5 percent.
IOC, Vedanta, Indiabulls Housing, Bajaj Finance, HPCL, BPCL and ONGC gained 1-4 percent.
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