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Markets trading at day’s low with Nifty hitting the lowest level since September 11, 2012.
At 15:00 PM, 30-share Sensex was down 397 points to trade at 17,870 and the 50-share Nifty slipped 112 points at 5,289 levels.
FMCG, Meta, Oil & Gas are the worst hit sectors. Bharti Airtel, ITC, Sun Pharma and Sterlite have slumped between 5-6%
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Updated at 14:25
Markets have extended the losses significantly with Sensex breaking the psychological mark of 18,000.
Government bonds were headed for their biggest gain in at least 15 years, while the rupee remained under pressure on Wednesday after the Reserve Bank of India (RBI) said it will buy bonds to ease a cash crunch, and relaxed bond holding rules for lenders.
The rupee breached the 64 level again after recovering a bit in morning trade. At 2:20 pm, the rupee was trading at 64.09/dollar.
European shares hovered near three-week lows on Wednesday while the dollar found some support as investors braced for a U.S. Federal Reserve report which may shed light on when it will trim its stimulus policy.
Emerging market currencies remained under pressure from expectations that the minutes from the Fed's last policy meeting in July, due out later, will signal an early end to the supply of cheap dollars they have relied on.
Banking shares are trading lower by up to 4% erasing their early morning gains after the Indian rupee crosses 64 mark in noon deals today.
Union Bank of India, Bank of India, Canara Bank, Federal Bank and Kotak Mahindra Bank are trading lower by 2-4% on the Bombay Stock Exchange (BSE) at 1401 hours.
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Updated at 14:00
Benchmark indices have erased early morning gains and are trading in negative zone on account of profit booking at higher levels and selling in metal, FMCG and IT shares.
At 14:00 PM, 30-share Sensex was down 117 points to trade at 18,130 and the 50-share Nifty slipped 41 points at 5,361 levels.
The rupee is keeping losses on oil bids, at 63.45/46 versus 63.25/26 last close. It hit a record low of 64.13 on Tuesday.
Dealers say RBI steps to ease cash have negligible impact on spot INR.
Some receiving of central bank's cash easing seen in forwards with 1-year premium at 482 points versus 499 last close.
Fear of RBI also keeping gains in check after intervention seen in spot, forwards on Tuesday.
Asian shares found a sliver of support on Wednesday following some punishing falls, but the reprieve could prove vanishingly short should minutes of the Federal Reserve's July policy meeting add to suspicions it will soon pare back on stimulus.
Back home, BSE Metal, FMCG, TECk, IT and Healthcare indices have slipped between 1-2%. However, BSE Bankex and BSE Consumer Durable index have gained by 1%.
Shares of IT majors Infosys and TCS have slumped between 0.4-2% on concerns about their valuations relative to the market and on fears that the rupee may regain some of its recent losses as it looks oversold at current levels.
The rupee made a record low of 64.13 to the dollar on Tuesday despite various measure by India's central bank and the government since mid-July.
"We remain positive on the IT sector. The growth recovery in US and Europe along with steep depreciation in rupee has improved outlook of IT companies. Today's correction is merely on account of profit-booking and can used to BUY IT stocks from a 6-8 month horizon," said Sanjeev Hota, assistant VP (IT), Sharekhan.
Metal shares like Sterlite Inds, Hindalco and Tata Steel have dropped between 1-4%.
Hindustan Zinc declined 3.71%. The stock had jumped 13.1% yesterday on reports that the legal hurdle has been cleared for government's stake sale in the company and BALCO. Government of India holds 29.54% stake in Hindustan Zinc while Sterlite Industries (India) has 64.92% stake as of 30 June 2013.
Sterlite Industries (India) declined 2.04% after galloping 9.91% yesterday. Sesa Goa said that the merger of Sterlite Energy with Sesa Goa and the demerger of the aluminium business undertaking of Vedanta Aluminium (VAL) into Sesa Goa pursuant to the Scheme of Amalgamation and Arrangement have become effective.
FMCG major ITC has slipped by almost 3%. Index heavyweight RIL declined by over 2%. The petroleum ministry is 'examining' suggestions that Reliance Industries be asked to sell gas it has failed to deliver at the old price of $4.2 per million British thermal unit, the Lok Sabha was informed.
On the gaining side, banking shares are in focus, after the Reserve Bank of India (RBI) decided to allow banks to transfer SLR (statutory liquidity ratio) securities to HTM (Held to Maturity) category from available for sale (AFS) / held for trading (HFT) categories up to the limit of 24.5% as a one-time measure.
Such transfer of securities from AFS/HFT category to HTM category is to be made at the lower of the book value or market value (calculated as of July 15, 2013).
The market breath in BSE remains marginally negative.
