Hit by a global sell-off, the Bombay Stock Exchange benchmark Sensex on Monday plummeted over 426 points, in the biggest drop in about five months, on fears linked to US monetary stimulus tapering and investors turning cautious ahead of the
RBI policy meet .
The sentiment further dampened after the rupee slipped past the 63-mark versus dollar as a rout in emerging market currencies continued. Reports said the south American country Argentina abandoning support of its currency peso on the open market affected investors.
After opening nearly 235 points lower, the BSE 30-share Sensex remained in the negative terrain throughout the day.
It touched a low of 20,688.03, before settling at 20,707.45, a drop of 426.11 points or 2.02 per cent compared to Friday's close. This was the biggest drop since the 651.47-point plunge on September 3, 2013.
Monday's closing also marks the weakest level in 3 weeks.
ICICI Bank and HDFC Bank led 27 losers in Sensex lower.
Tata Motors and Tata Steel slid by over 6 per cent each.
A bout of uncertainty has gripped investors, especially those betting on rate-sensitive banking, auto and realty, after the RBI Governor Raghuram Rajan called inflation a "destructive disease" last week. Hopes of a rate cut had faded after a panel recommended making retail inflation a priority.
"...there is an anticipation in the market that RBI will keep its interest rates high in spite of some corrections seen in the inflation numbers," said Jignesh Chaudhary, Head Of Research, Veracity Broking Services.
Overall, 1,952 stocks declined while 643 gained on the BSE-meaning seven out of every ten stocks ended lower.
All 12 BSE sectoral indices ended in the red.
Profit-booking by wary investors ahead of the expiry of January equity derivative contracts on Thursday was also one of the factors responsible for the down-trend.
The 50-issue National Stock Exchange Nifty tumbled by 130.90 points, or 2.09 per cent, to settle at one-month low of 6,135.85.
"Markets in India fell sharply largely due to the weakness in global markets and ahead of RBI meeting tomorrow (Tuesday). Concerns over the contagion from emerging markets like China and Argentina kept sentiments subdued," said Dipen Shah, Head-Private Client Group Research, Kotak Securities.
Over 100 stocks on the BSE hit their 52-week lows as second-line stocks too were at the receiving end.
Globally, Asian stocks ended sharply lower with losses in 1.03-2.51 per cent range. European markets too were trading lower. France's CAC was down by 0.43 per cent, Germany's DAX by 0.48 per cent and the UK's FTSE by 1.74 per cent in late trade.
Global fund managers said emerging market currencies continued to reel under selling pressure for the second day in a row after Friday's rout.
Global markets are jittery as the upcoming two-day US Fed meeting may see the central bank paring back its stimulus further by USD 10 billion to $65 billion a month, they added.
Coming back to domestic markets, across-the-board selling was seen as all the BSE sectoral indices closed in the red with up to 6.82 per cent losses.
The S&P BSE Midcap and Smallcap indices closed down by 2.82 per cent and 2.64 per cent respectively, indicating the fear of retail investors, said traders.
In the bluechip index 30-scrip Sensex, 27 scrips ended lower and the remaining three-HUL, ITC and Cipla-managed to end in the green.
Tata Motors, Tata Steel, ICICI Bank, Tata Power, Maruti Suzuki, Axis Bank, Sesa Sterlite, HDFC Bank, Coal India, RIL, L&T, Hindalco, ONGC and M&M were among notable Sensex losers.
Among S&P BSE indices, Realty fell by 6.82 per cent, followed by Bankex (3.97 per cent), Metal (3.81 per cent), Auto (3.33 per cent), Power (3.01 per cent), Capital Goods (2.70 per cent) and Oil&gas (2.37 per cent) led the losers.
The total turnover fell to Rs 1,867.10 crore on Monday from Rs 2,684.02 crore last Friday.
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