With the drought fears and central bank’s cautious stance on economic recovery, the market slipped into the negative zone on Monday. The benchmark BSE Sensex plunged by 245 points to 26,523.09 -- its lowest in nearly eight months -- on concerns that the US Fed will increase rates as early as September. The 30-share index has seen an erosion of 1,326 points, since Tuesday, when the Reserve Bank of India (RBI) had cut repo rate by 25 bps, despite flagging concerns over economic recovery. On the same day, the Met department had forecast monsoon to be deficient this year, triggering drought fears.
The 50-share NSE Nifty continued its slide for the sixth session and dipped below the psychological 8,100-mark by tumbling 70.55 points or 0.87 per cent to close at 8,044.15. “The markets remained weak tracking the global cues. The concerns that US Federal Reserve may increase its interest rates on the back of positive US jobs data added pressure to the domestic market along with international market,” said Alex Mathews, Head Research at Geojit BNP Paribas Financial.
The US posted a better-than-expected jobs data on Friday raising fears that the Federal Reserve was on track to raise interest rates this year. The Sensex, after opening higher at 26,814.31, advanced to touch the day’s high of 26,827.05 on value-buying in recently beaten blue-chip stocks. However, the market slipped on emergence of profit-booking and touched a low of 26,472.87 before settling 245.40 points or 0.92 per cent down at 26,523.09, a level last seen on October 20, 2014. As many as 25 Sensex stocks closed in the red. Sectoral indices like consumer durables index suffered the most by falling 1.94 per cent, followed by metal (1.73 pc), oil&Gas (1.55 pc), FMCG (1.52 pc).