Frontline indices lost more than 3 percent in two straight days, especially after imposition of long term capital gains at 10 percent and rising concerns of higher inflation.
Investors sentiment remained weak on Monday as benchmark indices extended sell-off for the fifth consecutive session, dented by global weakness on worries that US inflation could rise faster than expectations.
Frontline indices lost more than 3 percent in two straight days, especially after imposition of long term capital gains at 10 percent and rising concerns of higher inflation that could force banks to hike interest rates sooner-than-expected.
The 30-share BSE Sensex was down 309.59 points or 0.88 percent at 34,757.16 and the 50-share NSE Nifty fell 94.10 points or 0.87 percent to 10,666.50, weighed by private banking & financials, metals, oil and infrastructure stocks.
HDFC (down 4.23 percent) and HDFC Bank (1.75 percent) dragged Nifty the most.
"It's a tough scenario and we do not expect any respite in near future. Negativity on local front combined with slide in world markets indicates further correction. However, downside in index seems capped but volatility would be hard to handle," Jayant Manglik, President, Religare Broking said.
He prefers hedged positions instead of outright futures and wait for further clarity.
The growth in services sector also failed to lift the market’s sentiment. Nikkei India Services PMI increased to 51.7 in January 2018 from 50.9 in December 2017 as per Markit Economics data.
The broader markets, however, recovered sharply in late trade to close 0.2 percent lower. Even market breadth also improved as the day progressed. About three shares declined for every two shares rising on the BSE against 9:1 in early trade.
Global markets were under pressure on fears of sooner-than-expected rate hike by the US Federal Reserve. Asian markets barring China's Shanghai closed sharply lower, with the Japan's Nikkei losing 2.5 percent, tracking negative lead from Wall Street.
Hong Kong's Hang Seng, Australia's ASX 200 and South Korea's Kospi declined 1-1.6 percent. European stocks - France CAC, Germany DAX and Britain FTSE were around a percent lower at the time of writing this article.
Back home, Nifty Bank was the biggest loser among sectoral indices, falling 1.33 percent largely due to private lenders whereas PSU Bank index gained 0.6 percent and Auto was up 0.75 percent.
Tata Motors gained 3.14 percent ahead of earnings that announced after market hours. Analysts largely expect the stock to open sharply lower on Tuesday as its consolidated profit at Rs 1,215 crore missed analyst estimates due to weak Jaguar Land Rover performance, though standalone performance was strong.
Bharti Airtel was biggest gainer among Nifty 50 stocks, rising 4.2 percent as Singtel will invest Rs 2,649 crore in promoter company, Bharti Telecom via preferential issue and funds raised will be used towards debt reduction.
Bosch gained 2.45 percent despite earnings missed expectations. Profit growth of 30.8 percent YoY at Rs 281 crore was below CNBC-TV18 estimates of Rs 321 crore for Q3.
Aurobindo Pharma was up 1.4 percent on getting approval from US FDA for Niacin tablets that are used to prevent heart disease in patients with high cholesterol.
L&T, ICICI Bank, TCS, IndusInd Bank, Kotak Mahindra Bank, Vedanta, Adani Ports, HUL and ONGC among others were down 1-4 percent.
ITC, HPCL, Maruti Suzuki, Power Grid, Bharti Infratel, Tech Mahindra and Coal India gained 1-2.5 percent.
Dredging Corporation gained 5.5 percent after CNBC-TV18 reports quoting NewsRise that Ministry of Shipping would sell government's shareholding in the company via 2-stage auction.
Colgate Palmolive rose half a percent on healthy growth in third quarter earnings. Profit grew by a whopping 33.5 percent year-on-year, with flat volume growth of 12 percent for the quarter ended December 2017.
Sugar stocks like Ugar Sugar, Triveni Engineering, Shree Renuka Sugars, Sakthi Sugars, Simbhaoli Sugar, Dwarikesh Sugar, Dhampur Sugar, Balrampur Chini, and Bajaj Hindusthan rallied 4-8 percent after reports suggested that the food ministry has proposed doubling of the import duty on sugar to 100 percent to curb cheaper imports, check falling wholesale prices of sweetener and ensure timely payment to cane farmers.
PC Jeweller, Radico Khaitain, United Breweries, Reliance Capital, Reliance Power, Jain Irrigation, Ashok Leyland, Indiabulls Real Estate, Future Consumer, Can Fin Homes, Bombay Dyeing, Mirza International and Westlife Development gained 4-16 percent.Vakrangee lost another 10 percent today, taking total losses to over 53 percent in six straight sessions despite clarification from the management, saying it has not received any communication from Sebi with respect to stock price manipulation.