Sensex sinks 249 pts, Nifty below 7800 on global sell-off

Moneycontrol Bureau

The market fell sharply for second consecutive session with the Nifty closing below 7800-mark on Friday following global sell-off as investors digested European Central Bank policy and Fed rate hike fears post comments from the Fed chair Janet Yellen. Banking & financials, FMCG, IT and auto stocks pulled the market down.

The 30-share BSE Sensex slipped 248.51 points or 0.96 percent to 25638.11 and the 50-share NSE Nifty declined 82.25 points or 1.05 percent to 7781.90. The BSE Midcap also fell in line with benchmarks, down 1 percent followed by Smallcap with 0.6 percent loss.

Analysts expect 2016 to be a difficult year for the market, though they are bullish on India for long term.

There will be a lot of headwinds for the market in the near-to-medium term as one can't ignore what is happening around the globe, says Amar Ambani, head of research at IIFL. He feels that markets will breathe a lot more easy once the US Federal Reserve action is out of the way.

But more than the Fed action, one should be worried about what China will do to revive its economy. "China devaluing its currency (yuan) further is a risk," he told CNBC-TV18.For the week, the Sensex and Nifty plunged 2 percent each due to correction in last two sessions.

Globally, Asian markets ended near three-week low following weakness on the Wall Street overnight post ECB policy that fell short of expectations and Yellen comments. Shanghai Composite, Nikkei and Kospi were down 1-2 percent followed by Hang Seng with 0.8 percent. In Europe, France's CAC, Germany's DAX and Britain's FTSE fell 0.4-0.7 percent (at 16 hours IST).

Fed chair Janet Yellen yesterday said the bank will proceed with caution in raising interest rates from near zero and that Fed funds rates would remain accommodative after the initial increase. ECB cut deposit rate by 10 basis points to negative 0.3 percent (short of expectations) and said its asset purchase program will also be extended until at least March 2017 and broadened in scope. Latest US jobs data and a meeting of oil producing group OPEC will be closely watched today.

The rupee has also seen depreciation today on equity market correction and dollar strength. The currency declined 10 paise to 66.76 a dollar.

Sun Pharma was the biggest gainer on Sensex amid weak market sentiment, up 4 percent as its subsidiary has received approval from the US Food and Drug Administration for anti-cancer drug Gleevec.

Reliance Communications was down over 3 percent after signing a deal with Tillman Global Holdings & TPG for stake sale in tower business. Zee Learn gained 3 percent and Tree House was up 10 percent after the Zee Entertainment's subsidiary has accorded in-principle approval for exploring consolidation options with Tree House.

Shares of HDFC, ITC, Mahindra & Mahindra and NTPC topped the selling list on Sensex, down more than 2 percent followed by ICICI Bank, HDFC Bank, Reliance Industries, Infosys and Tata Motors with 0.8-1.7 percent.

The market breadth was weak as about 1,561 shares declined against 1185 advancing shares on the Bombay Stock Exchange.