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Benchmark share indices ended nearly 1% lower, snapping a four-day winning streak, after weak economic data from China and minutes of the US Fed meeting suggested that it would continue its monetary stimulus measures dampened investor sentiment.
The 30-share BSE Sensex shed 0.9% or 186 points at 20,536 while the 50-unit NSE Nifty closed 1% or 61 points lower at 6,091.
Outlook for China, the world's second-largest economy, turned a tad grim after the latest data from China pointed to a contraction in manufacturing activity for second month in a row leading to sell-off in metal stocks on Thursday. China accounts for 35-40% of world's total base metal demand. The flash Markit/HSBC Purchasing Managers' Index (PMI) fell to a seven-month low of 48.3 in February from January's final reading of 49.5. A reading below 50 indicates a contraction while one above shows expansion
Further, minutes of the Federal Reserve's last meeting released late Wednesday signaled the continuation of trimming its bond buying program at the usual pace of $10bn-a-month unless economic data points otherwise.
Bank shares were among the top losers. ICICI Bank and HDFC Bank ended down 2.5 and 1%, respectively on the Bombay Stock Exchange (BSE).
Among the index heavyweights, ITC, Infosys, HDFC, ONGC, Reliance shed between 1.5-2.5% each.
BSE Metal was the other major loser among the sectoral indices down 1% amid weak China data followed by FMCG, Oil & Gas and TECk indices.
Shares of metal companies ended down after China’s PMI data for the month of February fell to a seven-month low. Tata Steel, NMDC, Coal India, JSW Steel, Hindalco Industries, Steel Authority of India and Sesa Sterlite ended down 0.4-1.9%.
Bajaj Auto and Dr Reddys Lab were the top gainers between 1.1- 1.8% . Dr. Reddy's Laboratories also touched its record high of Rs 2715 on Thursday. Tata Power, L&T, Wipro and BHEL, up 0.2-0.9% rounded off the gainers list.
In the broader markets, BSE Midcap ended flat with a negative bias while Smallcap index ended 0.1% lower.
The market breadth was negative on the BSE as 1,480 stocks declined and 1,192 stocks advanced.
Global Markets
Asian stocks tumbled on Thursday and the yen firmed as a survey painted a grim picture of China's manufacturing sector, heightening uncertainty about the outlook for the region's economic powerhouse.
Asian equities were already on the back foot, tracking U.S. losses after minutes of the Federal Reserve's latest policy meeting and a chorus of U.S. central bank officials showed it remained on track to taper its stimulus.
MSCI's broadest index of Asia-Pacific shares outside Japan extended its drop after the China survey, losing 1 percent. Japan's Nikkei stock average ended down 2.2 percent, marking its biggest daily percentage drop in two weeks.
The preliminary China Purchasing Managers' Index (PMI) from HSBC/Markit for February fell to a seven-month low of 48.3 in February.
