The markets pared their gains on renewed concerns that credit market losses will widen and a slowing global economy will dampen earnings.
The Sensex ended at 14,274.94 points, down 502.07 points or 3.4 per cent, while the Nifty closed at 4311.85 points, down 121.7 points or 2.74 per cent. Reliance Industries and banking stocks were the major losers.
The market snapped its five-day rally on July 24 as investors booked profits at higher levels. The key benchmark indices in UK, France and Germany were down 0.90 per cent to 1.48 per cent. The Hong Kong, Japan, South Korea, China and Singapore were down between 1.50 per cent and 1.97 per cent each.
ICICI Bank (down 9.62 per cent to Rs 656.85 a share), HDFC Bank (down 7.17 per cent to Rs 1127.15 a share) and Reliance Industries (down 6.9 per cent to Rs 2147.35 a share) were the major losers in today’s trading session. RIL hit a one-month low on concerns of increasing competition in its core refining business.
HSBC equity strategist Garry Evans said that Indian equity markets are in the midst of a typical bear market rally and have not yet bottomed out. The rally, driven by some relief on the political front, may last a while. However, inflation and interest rates have not yet peaked and corporate margins thus remain under pressure.
A sustainable rally is unlikely till the investors are convinced that inflation has peaked and pressure on margins will ease. This rally should be over by mid-September as the investors start focussing on the next quarter’s results, Evans concluded.
More From This Section
Banking stocks stood out among the worst performers, ahead of the policy announcement next week.
The BSE Bankex dipped by 5.75 per cent or 411.62 points. The only stocks that stood out in today’s market were Ranbaxy Laboratories (up 3.12 per cent to Rs 481.25), ACC (up 2.41 per cent to Rs 574.25) and Hindustan Unilever (up 1.91 per cent to Rs 232.20) as investors stocked up on the defensive healthcare and FMCG sectors.
Markets expect a repo rate hike though opinion is divided on the extent of the hike. The wholesale price index (WPI) data announced yesterday indicated that inflation rose 11.89 per cent in 12 months to July 12, below the previous week’s annual rise of 11.91 per cent. Inflation for the week ended May 17 was revised upwards to 8.66 per cent from 8.1 per cent.
The market breadth remained weak, with 1154 advancing stocks and 1460 declining stocks.
Foreign institutional investors sold equities worth Rs 565.73 crore, while domestic institutional investors sold equities worth Rs 302.41 crore.