Fall also due to worry over higher crude prices, and decline in rupee and bond
The benchmark indices slumped 2% on Monday to record their biggest single-day declines in about two months amid a sell-off in the global markets and uncertainty over the outcome of the Assembly polls due on Tuesday.
While the Sensex shed 713.53 points to close the session at 34,959.72, the broader Nifty pared 205.25 points to end at 10,488.45 to erase its entire gains for the year so far.
Since January, the Nifty has given a negative return of 10.8% in dollar terms against the 1.5% loss posted by the S&P 500 during the period.
The exit polls, which were released on December 7, indicated that the ruling Bharatiya Janata Party (BJP) was struggling just months before general elections next year.
The fall in the indices was also reinforced by higher oil prices following the decision of global producers to cut the output from January. The Brent crude, which is hovering close to $62 per barrel, has gained close to 5% from its November lows. The currency and bond prices too slumped with the rupee losing 53 paise to 71.34 against the US dollar. The yield on 10-year government bond rose 12.4 basis points (bps) to 7.59%.
The stocks that pulled down the Sensex are Reliance Industries (RIL), Kotak Mahindra Bank, HDFC and Infosys. These four companies together have contributed more than half of the Sensex’s fall of 713.53 points on Monday.
Kotak Mahindra Bank, which had rallied substantially in Friday’s trade, plunged the most on the Nifty after the bank filed a writ petition in the Bombay High Court against the RBI’s objection to its proposal of issuing perpetual non-convertible preference shares (PNCPS) to bring promoter Uday Kotak’s stake in the lender to 20% from the current 30%.
All the 19 sectoral indices compiled by the BSE ended the session in the red, with the BSE Realty losing as much as 3.2%. While the BSE Telecom declined 2.7%, the BSE Energy, Bankex, BSE Capital Goods and BSE Finance fell over 2%.
The weak sentiment saw much of the market give up value as more-than-half of the companies with market capitalisation of Rs 1,000 crore have lost over 25% of their value since January 1. Of 718 companies in this universe, 78.8% are in the red, and 300 companies have lost more than 30% of their value.
The Nifty MidCap Index has given up about 21% since the start of the year, and 78% of its constituents have lost value. The Nifty Small Cap Index has suffered a bruising 34.8% since January, and 91% of its members have seen a fall in prices.
Foreign portfolio investors bought shares worth $16.3 million in the cash segment on Monday, provisional data from the stock exchanges showed. However, overseas investors have remained net sellers for the most part of the year, offloading equities worth nearly $5 billion.
On the other hand, domestic institutional investors bought shares worth $15.2 billion during the same period.