Investors hammered the markets on Thursday, pulling down the benchmark Sensex by 2.42 per cent or over 423 points on worries that China may further tighten its monetary policy after the double-digit growth in the last quarter.
The 30-share Bombay Stock Exchange barometer tumbled to 17051.14, a steep fall of 423.35 points.
Tracking poor Wall Street and Asian markets, the Sensex opened 123 points down and touched the day’s low of 17025.26 during the day. This is the third consecutive fall this week. The National Stock Exchange 50-share Nifty also tumbled by 127.55 points breaking two key levels of 5200 and 5100 to a hit low of 5094.15. It dipped to 5085.45 during the day.
Analysts said China, after its stupendous 10.7 per cent GDP growth in the fourth quarter, will be have to cool down its overheated economy through monetary and fiscal policy measures.
This led to FIIs to resort to panic selling.
Marketmen said the second biggest dampener for the market was the less-than-expected Q3 earnings by the country’s largest engineering and construction firm Larsen & Toubro. L&T plunged by 6.85 per cent to Rs. 1,524.35 after the results, while the capital goods index tumbled 5.15 per cent to 13501.46.
Selling was across-the-board as all sectoral indices ended in the red between 5.15 per cent and 1.42 per cent.
The Power index was the next worst hit and was hammered by 3.47 per cent 3100.60 with Tata power leading with a 4.46 per cent fall at Rs. 1,357.30. While the PSU index was hammered 2.98 per cent, realty was by 2.78 per cent and pharma by 2.65 per cent. Analysts say that fears of a worldwide monetary policy tightening weighed on the market, leading the global markets to fall.
“The fall was also due to profit booking by FIIs as they are pulling out money from the market and are churning their portfolios ahead of the budget,” said Mr. Alex Mathews, Research Head Geojit BNP Paribas Financial Services, adding another reason is the strengthening dollar and euro which acted as a dampener on the already weak sentiment.
The fall was so widespread that even an easing food inflation numbers failed to halt the steep fall of the market. Food inflation for the week ended January 9 slipped to 16.8 per cent from 17.28 per cent in the previous week.
Major losers included L&T, Tata Power, BHEL, Sterlite, HDFC, Reliance Infra and Tata Motors. The Power index was the second loser as investors sold power shares for investing in upcoming mega follow-on-public offer (FPO) by the largest power generation firm NTPC which opens on February 3.
Rupee drops further
The rupee extended losses against the dollar for the third day on Thursday and closed at 46.04/05 against 45.94 on Wednesday. It moved in a range of 45.92 and 46.09 intra-day.
