Snapping its rally over the last two days, the Sensex on Wednesday plunged by over 513 points on heavy selling in metal, realty and banking stocks. The bellwether ended the day at 10,169.90, a sharp loss of 4.81 per cent, while the Nifty settled lower by 169.75 points, or 5.25 per cent.
After two days of good buying support, selling emerged after global stocks fell on renewed fears of the global economy falling into a recession. IT major Wipro’s cautious outlook for the near-term was another dampening factor, marketmen said.
Elsewhere, Asian indices closed lower in the range of 1.6-6.8 per cent. European markets also were down by about 2-3 per cent in their morning trading.
Earlier last week, the Sensex had fallen below the psychologically important 10,000-mark, but it regained the level this week and even posted a 700-point gain in the past two days.
Brokers said market sentiment continued to be affected by sustained capital outflows this month. FIIs remained net sellers, taking the total outflows to $1.15 billion in October.
India’s fourth largest IT exporter Wipro dropped 5.79 per cent after the firm on Wednesday announced a cautious outlook for the near-term in view of a slowdown in the global economy.
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Metal stocks tumbled following a sharp fall in prices on the London Metal Exchange yesterday.
Despite the rupee’s sharp fall against the dollar, IT stocks also suffered in sync with their ADRs in the US markets.
Telecom shares were also battered on fears that the government’s decision to impose a fine on unverified subscribers would reduce the bottom line of the telecom sector.
Pointing out that continuing low volume was a major cause of concern, analysts said the market hitting a bottom at 9,911, touched during trading on October 17, could not be ruled out.
The major pull to Sensex came from Reliance Industries (RIL), the country’s largest private sector company and the heaviest in the elite club. RIL was down by 5.83 per cent ahead of the company’s Q2 results on October 23.