Losing altitude for the third straight week, the Indian equity markets crashed to their lowest levels in around a month's time, as tailwinds from the Bihar election outcome and macro economic numbers unsettled investors.
The key bellwether indices of the Indian equity markets lost over 2.40 percent each during the just-concluded weekly trade. This is the third consecutive week of losses, as the markets slipped in 12 out of the last 14 trading sessions.
Both the bellwether indices were dented by continued selling pressure by foreign portfolio investors (FPIs) on fears of a slowdown in the reforms process.
While, Bihar election verdict dragged the indices down by two percent on Monday, macro economic data drowned the equities markets to their lowest levels since late September.
Besides weak macros, investors were anxious about the heightened chances of a US rate hike in December, tepid quarterly results and the possibility of a washout of the upcoming winter session of parliament.
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The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE), fell by 654.71 points or 2.49 percent to 25,610.53 points from its previous weekly close at 26,265.24 points.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) posted losses for the weekly trade ended November 13. It was lower by 192.05 points or 2.41 percent to 7,762.25 points.
"The recent election setback for the ruling party has seemingly sprouted a lot of questions, primarily, the ability of the central government to continue with the reforms, and pass key bills in Rajya Sabha," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
In addition to Bihar elections outcome, fears on an impending US rate hike in December due to stronger economic data and comments from the US central banks' has spooked investors.
A hike in interest rates by the US Fed could potentially lead to massive amounts of pull-back of foreign funds from emerging economies like India. The US dollar will also strengthen against emerging market currencies, gold and other assest classes.
It is also expected to dent business margins, as access to capital from the US will become expensive.
"The uncertainties over the US Fed rate hike and broad sell-off in commodities led by the Chinese slowdown continue to unnerve investors," Vaibhav Agrawal, vice president, research, Angel Broking, told IANS.
Besides fears of a US rate hike disappointing macro data impacted the equities markets with IIP (Index of Industrial Production) growing at a slower than expected pace at 3.6 percent in September, while inflation inched up to 5 percent.
Gaurav Jain, a director with Hem Securities, told IANS: "Disappointing domestic macroeconomic numbers like IIP and CPI (consumer price index) dragged indices lower."
Furthermore, quarterly results outcome subdued market sentiments.
"The September earnings season has almost drawn to a close and has failed to provide any positive support to the markets. Tepid top lone performance has capped the bottom line performance," Nitasha Shankar, vice president for research with YES Securities elaborated.
The data with the National Securities Depository Limited (NSDL), showed that the FPIs bought Rs.1,536.8 crore or $ 233.23 million in equity and debt markets from November 9-13.
The data with stock exchanges showed that the FPIs sold stocks worth Rs.2,281.64 crore in the period under review. On the other hand, the domestic institutional investors (DIIs) bought stocks worth Rs.1,360.92 crore during the last trading week.
On a weekly basis, the rupee weakened by 34 paise to 66.10 to a US dollar (November 13) from its previous close of 65.76 to a greenback (November 6).
However, on a day-to-day basis, the rupee closed Friday's trade higher by 21 paise at 66.10 to a US dollar from its previous day's close of 66.31 to a greenback.
(Rohit Vaid can be contacted at rohit.v@ians.in)