Fear of country's sluggish growth further going for a toss after another round of tapering in stimulus by the US Feds and heavy selling from foreign institutional investors (FII) dragged the benchmark Sensex to its lowest levels in over 11 weeks. Sensex plummeted by 304.59 points and finally closed at 20,209.26, lowest since November 13, 2013 when the index closed at 20,194.40.
While the FII selling dragged the markets down, rupee appreciated by 12 paise and ended the session at Rs 62.56 per dollar. As per forex experts, despite the weak performance from the stock markets, domestic currency gained in anticipation that the ongoing spectrum auction would generate dollar inflows. Also weakness in dollar overseas helped the domestic currency edge a little higher, experts added.
The dollar index was down 0.14 per cent against a basket of six major currencies when local forex markets ended. "The initial weakness was due to poor China data and strength in US dollar index. Fed's decision of tapering its asset purchase programme every month is seen getting reflected in emerging market currencies," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
Meanwhile the broader index Nifty also fell by 87.70 points to 6,001.80, near to its lowest closing in 11 weeks. The fall was led by metal and real estate stocks as investors sentiment remained negative towards the near future of the sectors, markets analysts said.
On Sensex, off the 30 stocks comprising the index, 25 shares ended in pressure while on Nifty, 43 stocks declined amid the 50 listed scrips. As far as sectoral indices are concerned, 11 out of 12 sectoral indices on BSE closed with losses.
Off all the indices, healthcare index was the sole gainer after it rose by 1.10 per cent. Maximum pressure was seen on metal index as it slid by 3.06 per cent followed by real estate index which declined by 2.09 per cent. Automobile index also declined by 1.88 per cent after all the major companies of the sector posted a decline in their January sales figures. Information technology and technology indices also slid by 1.64 per cent and 1.69 per cent respectively and as per experts it was primarily due to heavy profit booking from investors and institutions.
Despite the data showing country's manufacturing sector in January expanded at the strongest pace in the past 10 months, Fund managers said that they were more worried that the US Fed's decision to further cut monetary stimulus by $ 10 billion per month will tighten capital inflows into India. The recent hike in short term lending rates by the Reserve Bank of India also added pressure on the rate sensitive sectors of real estate, automobile and bank. As per experts, metal stocks suffered heavy losses on weak Chinese data while rate sensitive stocks continued to fall due to rise in key lending rates by the central bank last week.
Another factor which kept pushing markets down was the heavy selling from FII front. As per the provisional data provided by the stock exchanges, FIIs sold shares worth a net Rs 735.73 crore .