 "Growth concerns roil financial markets globally")
In India, the stock market was steady in early trade, despite the US' Dow Jones Industrial Average the previous day posting its biggest intra-day fall in three years. But huge sell-off was seen later in the day and the benchmark indices closed in the red. The European markets, too, closed with losses for a second straight day.
BSE benchmark Sensex on Thursday lost 350 points (1.33 per cent) from its previous close to end at 25,999.3, its lowest level in two months, while the National Stock Exchange's Nifty fell 115.8 points (1.47 per cent) to close at 7,748.2. The rupee also weakened, to 61.85 a dollar, the lowest level in more than seven months.
Brent crude oil, which had earlier plunged to a 47-month low on oversupply concerns, recovered a little to $84.72 a barrel (as at 12:25 am IST).
"The sudden drop in oil prices (in the past few days) is something I have never seen in my life. It is a positive for the Indian market - almost as big a signal as a Narendra Modi-led government taking charge at the Centre earlier this year. That, probably, is the reason why our markets did not open lower. But FIIs (foreign institutional investors) are developing cold feet due to a turmoil seen in the financial markets, hence the correction," said Raamdeo Agrawal, joint managing director, Motilal Oswal Financial Services.
In Europe, stock markets remained weak, and the yields on Greek bonds soared past eight per cent over concerns the region's economic growth might fail to revive despite its stimulus measures from the country's central bank.
"Whenever Europe has struggled, it has impacted our markets. The Indian market will see some short-term impact this time as well. But the fate of the market here is largely linked to our domestic economy, which has its structural drivers in place," said Saurabh Mukherjea, chief executive officer (institutional equities), Ambit Capital.
The stocks of companies like Hindalco, Tata Steel and Reliance Industries - all with exposure to the world economy - ended weak on Thursday.
The Indian stock market has remained subdued since the US Federal Reserve's meeting on September 16 and 17, after which foreign investors, fearing the end of that country's bond-buying programme, became cautious. Since then, FIIs have pulled out over Rs 5,000 crore (more than $800 million) and the Sensex has corrected over 1,300 points (five per cent) from its record high around that time. From a level close to 24,000 on May 16, when general election results showed a new government was coming to power, the BSE index had risen nearly 15 per cent to over 27,000 as of early-September.
In the recent sell-off, the stock indices in the US and Europe, too, have shed most of their gains in the earlier part of 2014. The S&P 500 index, a key index for the US market, has declined about eight per cent in the less than a month, while the Stoxx Europe 600 Index has dropped nine per cent this month. Market experts believe any correction in the Indian market could be a good buying opportunity for investors. "We are recommending our clients to buy quality stocks in between selling. There are no concerns about India's structural position," said Mukherjea.
Experts also believe, with elections in Maharashtra and Haryana over, the government will soon unveil its reform agenda. "The fall in oil prices is a key positive. The government will now push ahead with reforms, as the state elections are over," said Agarwal.