Negative global cues, coupled with a slump in commodity prices and a weak rupee depressed the Indian equity markets on Wednesday. This led to a barometer index provisionally closing 418 points down.
Selling frenzy led to both the bellwether indices of the Indian equity markets closing at levels which were last seen during May-June 2014.
Initially also, both the bellwether indices opened weak in sync with their Asian peers and due to the flat closing of the US markets on Tuesday.
The selling pressure was accelerated by absence of any fresh positive trigger and below expected third quarter (Q3) results.
Furthermore, investors were seen cautious regarding the sliding value of rupee which touched a low of 68.16 to a US dollar -- its weakest level since September 2013 during the intra-day trade.
The rupee previously closed at 67.64-65 to a greenback.
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"Over the near term, unwinding pressure on US dollar shorts in the offshore markets and importer covering can keep the upward pressure on USD/INR," Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.
"However, central bank can get aggressive in its intervention at current levels. As a result, a range of 67.50-68.50/70 can be seen over the near term."
The weakness in the rupee value indicates the massive foreign funds outflow from the Indian equity and debt markets.
The foreign institutional investors (FIIs) were net sellers in the equity markets on Tuesday. They divested Rs.857.70 crore.
Besides, long-liquidation positions and disappointing macro-data points for December which eroded investors' hopes for an interest rate cut during the upcoming monetary policy review of the apex bank dented sentiments.
Even crude oil's continuous decline in prices to a new 12-year low is expected to dent the US markets further, thereby impacting global sentiments.
The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) plunged by 418 points or 1.71 percent.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) closed deep in the red. It was down by 126 points or 1.69 percent at 7,309.30 points.
The NSE Nifty touched a new 52-week low at 7,241.50 points.
The S&P BSE Sensex, which opened at 24,325.77 points, provisionally closed at 23,863.68 points (3.30 p.m.) -- down 417.80 points or 1.71 percent from the previous day's close at 24,479.84 points.
During the intra-day trade, the Sensex touched a high of 24,325.77 points and a low of 23,839.76 points -- its new low in 52 weeks.
The S&P BSE market breadth favoured the bears -- with 2,078 declines and only 536 advances.