The Bombay Stock Exchange Sensitive index, Sensex, fell by 1.64 per cent, even as participants started fearing further crisis in the eurozone and losing hopes on domestic reforms agenda. Market players also believe that the Reserve Bank of India (RBI) may to cut rates in the forthcoming first quarter review of monetary policy.
The Sensex opened lower on weak global cues and slid further to end near day’s lows. The 30-share index fell sharply by 281.09 points or 1.64 per cent to 16877.35. All sectoral indices ended in the red. Metal stock lost the most with 3.35 per cent decline followed by realty (2.87 per cent), power (2.70 per cent), automobile (2.40 per cent) and capital goods and banks 1.97 per cent each.
On the National Stock Exchange (NSE), a broader 50-share Nifty lost 87.15 points or 1.67 per cent at 5117.95.
“The markets lost about 1.7 per cent on concerns that Spain might become the fourth eurozone member to need a full international bail-out after a second region Murcia (after Valentia) indicated that it might need government help. There were also concerns that there might be resistance to foreign direct investment (FDI) in retail. This may mean that the government may face further roadblocks to economic reform agenda,” said Dipen Shah, Head of Private Client Group Research, Kotak Securities.
“The undercurrent is fragile amid fresh trouble for the debt-strapped eurozone and growing concern over slowdown in China. Stubbornly high inflation, rising twin deficits, a weak currency, below-average monsoon and low investor confidence are among the other pressure points for the Indian markets,” said Amar Ambani, Head of Research, IIFL.
Monsoon deficit remains an even bigger problem as inflation continues to be sticky while the twin deficits too remain elevated. Mr. Ambani also said that Indian indices would remain largely range-bound and choppy before the F&O expiry on Thursday.
Rupee plunges 65 paise
PTI reports:
Tracking weak stock markets, the rupee, on Monday, plunged by 65 paise to 55.97, its lowest closing in over three weeks, against the dollar amid fresh eurozone worries and month-end U.S. currency demand from oil firms.
At the inter-bank foreign exchange market, the rupee commenced sharply lower at 55.70 a dollar from last weekend’s close of 55.32. It scripted a turnaround by going up to the day’s high of 55.61 but the gains were temporary. It finally ended at 55.97, a level not seen since June 28.The dollar index was up by nearly 0.2 per cent against a basket of six major currencies.
