As global markets responded negatively to the 50 basis points (bps) cut in interest rate by the Federal Reserve, which came within seven days of its previous cut of 75 bps, key indices on the Indian bourses also ended lower on Thursday.
The 30-share BSE Sensex moved in the range of 591 points before closing at 17,648.71 points, a loss of 109.93 points or 0.62%.
The National Stock Exchange (NSE) Nifty gyrated in the range of 180 points before settling at 5,137.45 points, a loss of 30.15 points or 0.58% from its previous close.
According to dealers, the setback in the Indian markets on Thursday was also on account of the expiry of the January contract in the derivatives segment.
The markets opened with a positive gap on Thursday as the Federal Reserve cut key interest rates by 50 bps to 3% on Wednesday. However, the markets became volatile as the key Asian markets fell and the session became further choppy as the European markets opened on a negative note.
As per provisional data from the stock exchanges, foreign institutional investors (FIIs) were once again net sellers at Rs 3,938 crore while the domestic institutional investors were net buyers at Rs 2160.35 crore on Thursday.
The Sensex has lost 2,638.28 points or 13% while the S&P CNX Nifty shed 1,001.15 points or 16.30% in the current month and the meltdown was mainly contributed by the sell-off drive undertaken by FIIs since the beginning of the month.
FIIs have sucked out over Rs 13,000 crore from the markets in the last one month.
Interest rate-sensitive sectors, like the banking and realty indices continued to witness profit booking with BSE Bankex losing 185.95 points or 1.71% before closing at 10,713.91 points while the BSE Realty lost 277.13 points or 2.73% to close at 9,871.06 points.
On the derivatives segment, majority of the short positions in the index futures were rolled over to next series while there was a fresh build-up of short position in the February series.
As per the data from the NSE website, the Nifty February series added around 3.6 crore shares to its open interest before closing at a discount of 53.85 points with respect to its spot price at 5,083.60 points.
Marketwide rollovers were seen at around 70% while rollover in the Nifty futures was seen around 75%.
Siddharth Bhamre, derivatives analyst, Angel broking, said ?Though we saw rollover of around 70%, the overall sentiment seems to be bearish as most of the positions were rolled at the short side with heavy build-up in the open interest for the February series. We also saw some reverse arbitrage position taken by some investors and at some instances we noticed entire portfolio of investors being unwounded. Investors are taking huge positions on the index futures and not on individual stock futures, which clearly indicates their negative sentiments for the month of February.?