The four-day gaining streak in the country?s equity markets came to an end on Tuesday. The markets fell sharply because of heavy selling by foreign institutional investors (FIIs), weak cues from the European markets and concerns that the economic growth in China is slowing. Investors chose to book profit on speculation that the Reserve Bank of India (RBI) will hike interest rates to curb inflation after governor Duvvuri Subbarao said inflation is still above the comfort level.
According to NSE provisional data, FIIs on Tuesday sold equities worth Rs 572 crore. In May, they dumped shares worth Rs 8,711 crore ($1.88 billion), their highest pullout since October 2008, when they had sold shares worth over Rs 14,000 crore.
The benchmark Sensex dropped 372.6 points or 2.2% to end at 16,572.03, while the broad-based Nifty fell 116.1 points or 2.3% to end the day at 4,970.2.
All the BSE?s sectoral indices closed in the negative with metals, realty, oil & gas and banks declining the most. The metal index fell close to 4% as copper, aluminum and zinc declined on concerns of a slowdown in China, the biggest metal consumer, will hurt demand. Oil and gas stocks also lost 2.5% after crude oil prices fell over 2% as European debt concerns grew and the dollar strengthen further against the euro.
?Until the European Union takes proper actions, the markets will keep testing (lower levels),? said Andrew Holland, CEO ? equities, Ambit Capital. ?You don?t know how deep the hole is.?
Maruti Suzuki, Cipla and ACC were the only gainers on the 30-share index. Maruti Suzuki closed almost 2% higher after it recorded highest ever monthly sales in May.
Biggest losers on the Sensex were JP Associates, which declined 6%, followed by Sterlite Industries, which fell 5%, while Hindalco and Tata Steel also dropped over 4% each.
Market breadth was negative as only 1,005 stocks advanced against 1,796 declines on the BSE.
The NSE cash segment clocked a turnover of Rs 13,223 crore, while the total turnover on the F&O segment was Rs 81,961 crore, 30% higher compared with the previous day.
Analysts said Indian markets were the biggest loser in the Asia, where all the major indices ended in red. European stocks too were lower in the mid-session.
?Investor sentiment is weak across the globe and in such a scenario further correction in the domestic market cannot be ruled out,” Geojit BNP Paribas Financial Services Research head Alex Mathews said.