Selling was widespread with realty, capital goods, power and banking being among the worst hit. The IT sector, which earns most revenues in dollar, escaped unscathed as the rupee slipped below the 62-mark against the US currency.
Falling for the second day in a row this calendar year, the BSE Sensex
closed at 20,888.33, down 252.15 points, or 1.19 per cent after surging about 190 points intra-day to touch 21,331.32. Yesterday, it had slipped by 30.20 points.
On November 21, 2013, the BSE Sensex had slid 406.08 points.
Brokers said investors were seen booking profits after BSE Sensex rose by around 9 per cent in 2013 as recent economic data brought back the haze over domestic outlook, while global growth indicators still appear shaky.
Data yesterday showed China's Purchasing Managers' Index slipped to a 4-month low in December, while another report today indicated that manufacturing rose at a slow pace.
The broad-based National Stock Exchange index NSE Nifty dropped by 80.50 points, or 1.28 per cent, to end at 6,221.15, after climbing to 6,358.30 at the outset.
Also, SX40 index, the flagship index of MCX-SX, closed at 12,435.29, down 142.23 points.
The BSE Realty sector index fell the most by losing 3.07 per cent, followed by Capital Goods index (2.84 per cent), Power index (2.09 per cent) and Banking index (1.82 per cent).
In Asia, Kospi and Shanghai Composite fell while Nikkei, Strait Times and Hang Seng rose. However, FTSE, CAC and DAX indices in Europe were trading lower in afternoon trade.
Sanjeev Zarbade, Vice President- Private Client Group Research, Kotak Securities:
US and European markets were closed yesterday and hence, there were no major global cues for today. Asian markets were also trading mixed. The Indian markets opened in the positive however after pulling through a strong session till afternoon, the markets sold off in the last few hours of trading. Selling was seen across sectors but was more pronounced in sectors like Banks and Capital Goods. The fall was sudden and unexpected, as there were no triggers or news for the fall. However, we have been cautious on the markets because of the run-up seen over the past few weeks (even in cyclical sectors) and no major improvement in the domestic ground level economic realities.
* BSE index falls 1.19 pct; NSE ends 1.28 pct lower
* Global shares fall as China disappoints
* Midcap Indian state-owned banks rise on valuations
Indian shares fall most in nearly 1-1/2 months; blue chips hit
(Reuters) Indian shares fell more than 1 percent on Thursday, posting their biggest single-day percentage fall in nearly 1-1/2 months as profit-booking hit blue chips such as ICICI Bank for a second consecutive day, in a weak start to 2014.
Combined with Wednesday's fall, the benchmark BSE index is down 1.3 percent over the first two trading sessions of the year, after gaining 8.9 percent last year on the back of strong foreign buying.
Falls on Thursday were accentuated by weaker European and Asian shares after disappointing manufacturing data from China.
Shares have started the year with caution ahead of upcoming quarterly earnings, with analysts also keenly awaiting inflation data due mid-month that will help determine whether the Reserve Bank of India raises interest rates at the end of January.
Any rate hikes could further undermine confidence in economic growth. Data on Thursday showed the HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, fell to 50.7 in December from 51.3 in the previous month, reflecting softness in new domestic orders.
"Earnings would be more important from equity market's perspective as market has discounted some cooling off in inflation. We are expecting some positive surprises in Oct-Dec results," said Sudip Bandyopadhyay, managing director at Destimoney Securities Pvt Ltd.
The benchmark BSE index fell 1.19 percent, or 252.15 points, to end at 20,888.33, erasing earlier gains of as much as 0.9 percent.
The broader NSE index lost 1.28 percent, or 80.50 points, to end at 6,221.15, posting its lowest close since Dec 19. Both indexes marked their biggest single day fall since Nov 21.
ICICI Bank Ltd fell 2 percent after earlier rising as much as 1.9 percent, while Axis Bank Ltd lost 1.5 percent.
Among non-banking lenders, IDFC Ltd lost 4.7 percent, erasing earlier gains of 1.5 percent, while Housing Development Finance Corp Ltd ended 0.3 percent lower.
In other blue chip shares, Larsen and Toubro Ltd fell 3 percent, while ITC Ltd ended lower 2.3 percent.
However among stocks that gained, midcap state-owned banks, including Corporation Bank Ltd, rose as dealers cited attractive valuations compared with larger private sector rivals. Corporation Bank and Indian Bank Ltd ended up 0.5 percent each.
FACTORS TO WATCH
* Dollar near 5-year high vs yen, eyes on U.S. data
* Brent rises above $111, but weak China data drags
* Asia shares turn mixed as China disappoints
* Foreign institutional investor flows