The benchmark BSE Sensex tanked 538.12 points, its worst single-day drop this year, to slip below 27,000-mark while the wider Nifty crashed below 8,100 level due to capital outflows amid weak economic data and sharp falls in global markets.
A weakening rupee which slumped to a 13-month low and tumbling global markets on renewed concerns over growth as crude oil prices crahsed to fresh multi-years low, accelerated selling activity on the bourses, brokers said.
Meanwhile, the rupee tumbled by 64 paise, or 1 per cent, to hit a 13-month low of 63.58 against the dollar (intra-day).
Globally, Brent crude slumped to nearly USD 59 for the first time since 2009.
The 30-share Sensex closed at 26,781.44 points, down by 538.12 points, or 1.97 per cent. Today’s drop is the biggest since September 3, 2013 when the BSE index tumbled by 651 points.
After cracking the 8,100-mark, the NSE Nifty touched the day’s low of 8,052.60 before settling down by 152 points, or 1.85 per cent, at 8,067.60.
India’s trade deficit widened to one-and-a-half year high of USD 16.86 billion in November due to over six-fold jump in gold imports even as exports grew by 7.27 per cent.
Among the Sensex constituents, 27 ended lower.
Sesa Sterlite was the biggest loser among 30 Sensex stocks. It slumped by 7.77 pc, followed by Dr Reddy (6.32 pc), Hindalco (5.67 pc) and SBI (4.66 pc).
The stocks of Tata Power (4.59 pc), ICICI Bank (4.30 pc) NTPC (3.20 pc), ITC Ltd (3.13 pc), Tata Steel (2.82 pc) and HDFC Ltd (3.11 pc) also dropped.
A weak Asian trend after data showed industrial acitivity is contracting in China and lower opening in Europe dampened the trading sentiments, brokers said.
Foreign Portfolio Investors sold shares worth a net Rs 455.72 crore yesterday as per provisional data.
The BSE small-cap index lost 3.36 per cent and the mid-cap index fell 2.96 per cent.
BSE slumps 2 pct; weakening rupee challenges rate cut hopes
(Reuters) Indian shares slumped nearly 2 percent on Tuesday, marking their biggest daily fall in more than five months on worries the global turmoil will spur heavy foreign selling and force the central bank to delay expected cuts in interest rates.
The Indian rupee hit a 13-month low on Tuesday after Russia’s sharp increase in interest rates reinforced concerns about the global economy at a time when oil prices are sliding. A downbeat China factory survey also weighed.
A key volatility gauge for domestic shares, India VIX , ended up 16.3 percent, marking its biggest one-day gain since January 2014.
Foreign investors were net sellers of shares worth a total of $342.64 million over the past five sessions, although they remain net buyers of $17.1 billion this year, making the Indian stock market the second best performer in dollar terms in Asia this year after China.
Analysts remain optimistic India will avoid any major selling by foreign investors. The broader NSE index is down 6.1 percent so far in December, but is still up 28 percent this year.
Although the fall in oil prices has raised worries about the global economy, it has helped lower the cost of imports, while analysts are hopeful the Indian economy will improve on the back of reforms expected from Prime Minister Narendra Modi’s government.
“India is favourably placed amid crude oil fall and economic growth but broad dollar strength will make December a wash out,” said Deven Choksey, managing director at K R Choksey Securities.
The current fall will provide opportunities to pick up good stocks for the long term, Choksey added.
The benchmark BSE index ended 1.97 percent lower at 26,781.44, below the psychologically important 27,000 level and its lowest close since Oct. 27.
The broader NSE index closed down 1.85 percent at 8,067.60, its lowest close since Oct. 28.
Both indexes posted their biggest single day falls since July 8, when shares tumbled after the railway budget raised worries the government would slash spending.
Falls in December have come as Brent crude price has almost halved from its 2014 high of $115 a barrel in June, raising worries about global growth.
Blue-chips led the decliners on Tuesday, with ITC down 3 percent.
Rate-sensitive shares fell on worries the Reserve Bank of India would delay easing the monetary policy given the instability in global markets.
Data showing plunging retail and wholesale inflation had reinforced hopes the RBI would cut rates at its next policy review in February.
State Bank of India slumped 4.8 percent while ICICI Bank lost 4.2 percent. Tata Motors lost 2.5 percent.
Companies earning a substantial portion of revenues from Russia also slumped after its central bank raised interest rates to 17 percent in response to the rouble hitting an all-time low.
Dr. Reddy’s Laboratories lost 6.4 percent, while Oil and Natural Gas Corp ended 2.2 percent lower.
Among the gainers, software exporters rose on hopes a weaker rupee would boost their overseas earnings. Tata Consultancy Services rose 3.6 percent.