The Sensex has lost 24 per cent this year, the most among the world’s largest equity markets.
The Reserve Bank of India’s caution against risks to economic growth and its policy guidance also dampened investors’ sentiment, even as it refrained from raising borrowing costs for the first time in eight meetings.
The Bombay Stock Exchange (BSE) benchmark, the Sensex, sank 2.2 per cent to 15,491.35, its lowest close since November 3, 2009. The 30-stock index has lost 24 per cent this year, the most among the world’s largest equity markets, as 13 rate increases since March 2010 and a drop in the rupee to a record low erode company earnings, already threatened by Europe’s debt crisis.
“The demand for Chida-mbaram’s resignation was one reason for on Friday’s market fall,” said Ambareesh Baliga, chief operating officer, Way2Wealth Securities. “Selling may continue in coming sessions as sentiment is pathetic at present. There is no buying support.”
The Nifty index on the National Stock Exchange (NSE) tumbled two per cent to 4,651.60. This is the first time the index has closed below 4,700 since November 3, 2009, considered an important support level for the 50-stock index.
| BEAR HUG Top 5 BSE sectoral losers | ||
| 16-Dec | % Chg* | |
| Cap. goods | 8,427.17 | -4.36 |
| Realty | 1,447.43 | -3.34 |
| Bankex | 9,420.85 | -3.16 |
| Power | 1,811.14 | -2.76 |
| Metal | 9,682.99 | -2.59 |
| Top 5 Nifty losers | ||
| L&T | 1,072.65 | -5.33 |
| Axis Bank | 904.05 | -4.75 |
| PNB | 828.65 | -4.59 |
| Sterlite Ind | 89.2 | -4.45 |
| DLF | 194.95 | -3.92 |
| * Change over previous close Data compiled by BS Research Bureau | ||
“The unexpected selling in the afternoon could be more technical in nature. With the Nifty breaching 4,700, there could be further downside,” said Amar Ambani, head of research at Mumbai-based IIFL.
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As many as 28 of the 30 stocks on the Sensex slid, with industrials contributing the most to losses, followed by banks, data compiled by Bloomberg show. Reliance tumbled 3.8 per cent to Rs 721.85, the lowest since August 26. Larsen & Toubro slumped 5.3 per cent to Rs 1,072.65, the lowest since May 2009.
From provisional data on the BSE, foreign institutional investors sold shares worth Rs 220 crore on Friday, while domestic institutional investors bought shares to the tune of Rs 335 crore.
RBI governor D Subbarao decided on a pause from rate increases after inflation had slowed to a one-year low, industrial output fell for the first time in 28 months and the economy grew last quarter at the weakest pace in more than two years. Still, a “rate cut is an event some way ahead,” he told reporters here, adding he wouldn’t speculate on when the central bank would begin easing monetary policy.