With the concern of delaying the Government's key reform bills and weakness in global bond markets, the benchmark BSE Sensex on Tuesday slipped below the 27,000-mark across-the-board, plunging by 630 points at the close.
After two sessions of rally, the market witnessed a selling spree by the investors, while rupee falling below the 64-mark, tumbling by 32 paise to close at 64.17 against the dollar too weighed on sentiments.
Traders said that foreign investors' worries continued to bog market despite the Government's move to assuage their taxation issues. “The recent phase of range-bound correction is led by FIIs, in spite of setting up a high-level committee to decide MAT issue.
Factors like increase in Europe bond yield and currency depreciation are impacting global inflows,” said Vinod Nair, Head-Fundamental Research at Geojit BNP Paribas Financial Services.
Moreover, Goods and Service Tax (GST) Amendment Bill and the land Acquisition Bill, which got stuck in Rajya Sabha, raised fears of delay in Government's economic reforms.
Meanwhile, snapping its two-day rising streak, the rupee also on Tuesday tumbled by 32 paise to close at 64.17 on fresh dollar demand from importers and some banks ahead of the inflation data and the IIP data. A weak dollar overseas amid renewed capital inflows, however, restricted the rupee's fall to some extent, according to the forex dealers.
As far as the market is concerned, the Sensex finally settled down by 629.82 points or 2.29 per cent at 26,877.48. It had rallied by 908.19 points in the last two sessions on the Government's move on MAT issue and the central bank's rate-cut hopes.
Participants were also cautious ahead of the release of retail inflation data for April and IIP data for March. Globally, volatility in the bond markets weighed on global stocks,
adding to investors' anxiety over Greece's finances. Ten-year US Treasury yields hit their highest since early December, while German yields added 8 bps to 0.67 per cent. The 50-issue Nifty slipped below the 8,200-level by falling 198.30 points or 2.38 per cent to close at 8,126.95. Intra-day, it moved between 8,326.65 and 8,115.30.
"Markets corrected steeply after being spooked by fears of Greek's exit from the euro zone. Greece was seen gaining limited support from the euro zone on Monday for the progress it has made in difficult bailout requirements" said Hiren Dhakan, Associate Fund manager at Bonanza Portfolio.
Jignesh Chaudhary, Head of Research at Veracity Broking Services said, “Now traders are eagerly waiting for the series of US data lined up for the week, which will show the road ahead to the market.”
Meanwhile, total investor wealth on Tuesday plunged over Rs2 lakh crore following a crash in BSE barometer. Of 30-Sensex stocks, 28 ended lower, while Dr Reddy's and Hero MotoCorp managed to finish in the green.