Showing uncanny synchronisation with the manner in which markets across the globe plummeted on US Federal Reserve Chairman Ben Bernanke's remarks on likely scaling down of monetary stimulus, the BSE benchmark Sensex on Thursday fell nearly 390 points to end below the 20,000-level mark as other factors like SBI's poor Q4 results also left their impact on it.
Across the markets, investor wealth worth Rs 1.37 lakh crore was wiped off during the day with over 1,700 stocks ending on the losing side while nearly 600 scrips managing to close higher.
Though the Finance Minister P Chidambaram tried indulging in damage control by saying that the situation should not be misread, the 30-share index sank under immense pressure right in the opening with overseas investors stepping up selling across counters.
Around 19 per cent slump in SBI's fourth quarter profit that sent its shares down 8 per cent, also triggered all-round selling with BSE Realty, Capital Goods, Power and Banking indices falling by 3-6 per cent. l&T, RIl, ICICI Bank, Bharti Airtel, BHEl and Jindal Steel were among major Sensex losers.
Sensex finally closed at a nearly two-week low level of 19,674.33, a fall of 387.91 points, or 1.93 per cent. In four days, it has tumbled by 611.79 points or 3.01 per cent.
Similarly, the broad-based 50-issue CNX Nifty of the NSE also tanked by 127.45 points or 2.09 per cent to end at 5,967.05. MCX-SX flagship index SX40 also closed down by 178.75 points, or 1.51 per cent, at 11,682.3.
In an effort to assuage the investors' sentiments, Chidambaram in an impromptu reaction said, “we have been looking at what is happening in the market. We think that Bernanake's statement has been misunderstood or misinterpreted. If we read the statement carefully, he has clearly indicated that he will continue with quantitative easing in the foreseeable future at about $85 billion a month or so.”
The Minister further said that quantitative easing is continuing in Japan and Europe and there have been no change whatsoever and the flows into India during May have been extremely copious.
“Fed Chairman Ben Bernanke suggestion that the central bank may begin tapering its bond-buying program later this year sent markets tumbling,” said a note from India Infoline.
Globally, Asian stocks slid after unexpected decline in China's manufacturing data in May after seven months and Japan's Nikkei stock index plunged by over 7 per cent.
US stock futures pointed to a sharply lower open later on Thursday after Federal Reserve Chairman Ben Bernanke reportedly said the bank could begin tapering its bond-buying programme.
In testimony to US Joint Economic Committee on Wednesday, Bernanke had said a decision to scale back Fed's asset purchases could be taken soon depending on economic data. Minutes from Fed's May meet also showed a number of policymakers inclined to slowing down bond purchases.
In Asian markets, key indices in China, Hong Kong, Singapore, Japan, Taiwan and South Korea shed by 1.16 per cent to 7.32 per cent. In Europe, the CAC (France) was down by 2.36 per cent, the DAX (Germany) by 2.62 per cent and the FTSE (UK) by 1.96 per cent.
Coming back to India, 28 stocks out of 30-share Sensex finished lower while just two closed higher. Apart from SBI which fell by 7.96 per cent, l&T (6.49 pc), Jindal Steel (4.05 pc), RIl (3.99 pc), NTPC (3.88 pc) and Bhel (3.74 pc) saw steep losses.
Bharti Airtel (3.59 pc), M&M (3.09 pc), ICICI Bank (3.03 pc), Tata Power (2.92 pc), Sterlite Ind. (2.59 pc), Maruti Suzuki (2.39 pc), Tata Steel (2.03 pc), Bajaj Auto (2.02 pc), Gail India (1.90 pc), Wipro (1.48 pc), Hindalco Ind (1.27 pc), Infosys (1.23 pc) and ITC (1.04 pc) also ended lower. However, HDFC moved up by 0.53 per cent and Sun Pharma by 0.46 percent.