Markets recovered partially, but continued to trade lower on back of losses in index heavyweights - Infosys, RIL and ICICI Bank. Selling pressure in IT and realty stocks also weighed.
The BSE Sensex was at 17,241down 450 points and the Nifty slipped to 5,191, down 140 points.
----------------------- Updated at 13:00 hrs
The markets continued witnessing a rapid sell-off in the noon trades with both the benchmark indices at fresh calendar year lows. The BSE Sensex was at 17,124, down 569 points and the Nifty plunged to 5,149, down 183 points. The Sensex witnessed the worst opening in nearly two years - at 17,350 - down over 340 points. The index slipped below the 17,000-mark to touch a low of 16,991 on persistent selling pressure in index heavyweights mainly IT stocks.
The BSE IT index has slumped 5% to 5,390 after an overnight slide in US markets. US is the biggest market for services of Indian IT firms. Infosys and TCS, alone, account for around 25% of the total losses in the noon trades, with the former accounting for a 100-point cut on the Sensex, and the latter another 50-odd points. Realty, consumer durables and TECk dropped around 5% each.
Recession jitters inflated investors anxiety after series of weak economic data raised global growth concerns. On Thursday the European Central Banks held policy rates at 1.5% and resumed the purchase of government bonds after a hiatus of four months. The ECB also announced longer term funding for banks facing cash crunch.
Overnight, Wall Street indices were battered very badly on worries of US economic health. Dow Jones Industrial Average lost 4.3%, the biggest percentage drop since 2008. Even the Standard & Poor’s 500 Index declined 4.8% and the Nasdaq Composite Index shed 5.1%. Asian markets also tumbled with the Hang Seng down 5%, with Nikkei, Straits Times and Seoul Composite following close behind.
Worries of the hike in interest rates slowing down corporate earnings growth further also weighed on investor sentiments. Interest rate and export sensitive, blue-chip stocks have tumbled this morning. 11 out of the Nifty 50 stocks have touched a new 52-week low, including metal bigweights - Sail, Hindalco and Jindal Steel.
Reliance Industries, has slipped nearly 4% to Rs 781 after outputs from the KG-D6 fields fell 27% to around 47 million standard cubic meters per day in June.
Cipla was trading on a flat note, down 0.4% at Rs 305, ahead of its results today.
The BSE market breadth continued to be remarkably negative. Out of 2,809 stocks traded, 2,517 stocks have declined while 246 have advanced.