Continuing with its downward trend, the benchmark BSE Sensex on Tuesday plunged by 538 points to register its worst single day loss in 16 months and closed below 27,000-mark as foreign investors, already confounded ahead of a crucial US Fed meeting, were spooked by a rate hike in Russia amid sinking oil prices.
Traders said domestic concerns like widening trade deficit and free-fall of rupee also added to worries of FIIs who booked profit across sectors. The domestic currency tumbled by 59 paise to 13-month low of 63.53.
The 30-share BSE index resumed the day sharply lower in line with weak Asian cues and remained under selling pressure throughout the day. It finally closed at at 26,781.44, a steep fall of 538.12 points or 1.97 per cent.
The previous worst single day loss was logged on September 3, 2013 when Sensex tanked by 651.47 points.
Selling pressure was so intense that 10 out of 12 indices ended the day with losses in the range of 1.44 per cent and 4.17 per cent, with metal, realty, FMCG, banking, consumer durable, healthcare and power being the worst hit.
Shares of software exporters, which would benefit from rupee fall, ended higher along with and teck firms. Sesa Sterlite was the biggest loser among 30 Sensex stocks at 7.77 per cent. Dr Reddy's tanked 6.32 per cent, Hindalco lost 5.67 per cent and SBI 4.66 per cent.
TCS notched up a gain of 3.40 per cent, while Infosys was up by 0.69 per cent.
Bank of Russia raised key interest rate to 17 per cent from 10.5 per cent in a desperate move to boost its currency and rescue troubled economy. Rouble's value has sunk roughly 50 per cent since January, battered by Western sanctions.
Analysts said Russia's economy is highly dependent on petroleum revenues. The average price of a barrel of oil has dropped below $56 down from high of $107 a few months ago, they added.
The 50-share NSE Nifty touched the day's low of 8,052.60 before settling down by 152 points, or 1.85 per cent lower at 8,067.60.
"What a contradiction, when domestic inflation is trending in line, providing room for rate cut sooner or later. But markets continue to fall factoring higher global risk.
"As crude price continues to fall, the concern over global growth is increasing. Profit-booking has increased from FIIs. As usual impending Fed meet (Dec 16-17), adds to volatility in equities, commodity and currency markets," said Vinod Nair, Head, Fundamental Research, Geojit BNP Paribas Financial Services.
The total market breadth was sharply negative as 2,327 shares declined while only 541 that advanced, Reflective of heavy selloff in second line counters by retail investors.
"Negative global cues and weakness in currency pushed the equity markets deep in the red. Sentiments further soured in reaction to the India’s trade deficit figure, which widened to 18-month high of USD 16.86 billion in November," said Jayant Manglik, President, Retail Distribution, Religare Securities.
Global crude oil prices (Brent) falling below USD 60 a barrel for the first time since 2009 will have a ripple effect across the global financial markets and economies, analysts said.
Meanwhile, foreign portfolio investors have pulled out shares worth Rs 455.72 crore yesterday, as per provisional data.
Except China that closed with gains, most Asian stocks finished remarkably lower as oil's slump and weaker-than- estimated Chinese manufacturing data stoked concerns that the global economy may falter.