Unlike everyone else, new year did not bring any cheer for the Indian stock markets as they continued to fall on the second consecutive session of 2014. The benchmark index on Thursday fell by 252.15 points and closed below the psychological mark of 21,000 at 20,888.33 while the broader index Nifty slid by 80.50 points to 6,221.15. It was a similar trade in currency markets as rupee depreciated by 36 paise to Rs 62.26 per dollar.
Analysts stressed that markets came under pressure due to heavy profit booking from retail investors and domestic institutions. Apart from that, rupee depreciation also triggered fresh selling in the equity markets, analysts added. Most profit booking came in midcap and small cap indices as they ended the session after falling by 1.77 per cent and 2.03 per cent respectively.
The benchmark Sensex had its biggest drop in six weeks as 11 out of 12 sectoral indices on BSE closed in red. The fall was led by real estate and capital goods indices as they fell by 3.07 per cent and 2.84 per cent respectively. Apart from that, power, banking and FMCG indices also slid due to profit booking by 2.09 per cent, 1.82 per cent and 1.74 per cent respectively. Sole gainer on BSE was the information technology index as it rose marginally by 0.11 per cent. Global stock markets were mixed after weaker manufacturing data in December indicated China’s economy might be slowing. India’s manufacturing sector decelerated marginally last month amid a slowdown in domestic order flows.
In currency front, rupee surrendered its initial gains and declined 36 paise to a one-month low of Rs 62.26 per dollar amid demand from importers as the US currency strengthened overseas. The local currency fell sharply to a low of 62.28 after a drop in the domestic equity market amid weak European cues and a decline in manufacturing data in December. In just last two sessions, rupee weakened by 46 paise.
“Negative closing in the local stock markets and strengthening dollar index led to weakness in the rupee. Other than this, a large petrochemical company is said to have bought dollars from the market, which put pressure on the rupee,” said Abhishek Goenka, CEO of India Forex Advisors.