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Benchmark indices are trading near one year lows amid weak global cues, along with selling pressure by institutional investors after the rupee which touched a fresh all-time low of Rs 62.78/$ raising worries of a widening current account deficit and higher inflation.
At 14:10 PM the 30-share Sensex plunged 391 points to 18,207 and the 50-share Nifty dropped 127 points to 5,381.
The Sensex and the Nifty touched an intra-day low of 18,150 mark and 5,370 levels, respectively. The Nifty slipped below 5,400 mark for the first time since September 12, 2012.
India VIX, the key gauge of market volatility, spiked over 10 per cent to 26 levels in today's trade. It crossed 26 levels for the first time since September, 2012
MONEY MARKET
The rupee fell to yet another record low on Monday as the government's steps unveiled last week seemed inadequate to stall the currency's fall.
The currency fell as far as 62.78 to the dollar, breaching the previous low of 62.03 hit on Friday.
India's benchmark 10-year government bond yield rose to 9 percent on Monday afternoon as the rupee continued to make a series of record lows as the government's measures were seen as inadequate to halt the free-fall in the currency.
Foreign institutional investors (FIIs)
Foreign institutional investors (FIIs) extend selling in index futures for a fourth day on Friday, totalling sales of 20.63 billion rupees, indicating they are bracing for lower levels in cash shares in the near term, dealers say.
Derivatives analysts say the rise in outstanding positions in index futures, coupled with a fall in cash share indexes, indicates the formation of short positions.
GLOBAL MARKETS
Japan's Nikkei share average rose on Monday as investors found buying opportunities in oil companies on rising oil futures, but trading was subdued as the market was focused on the minutes of the U.S. Federal Reserve's July policy meeting this week for more cues on when it will likely start tapering the stimulus.
The benchmark Nikkei gained 0.8 percent to 13,758.13 in choppy trade after falling to as low as 13,589.78 earlier. The Topix added 0.6 percent to 1,149.13.
GOLD
Gold hit fresh two-month highs on Monday, helped by weak U.S. data that increased the metal's safe-haven appeal, and further inflows into the world's biggest bullion-backed exchange traded fund (ETF).
Gold has gained about 8% in the last nine sessions on the back of a weaker dollar, short-covering and technical buying.
SECTORS & STOCKS
BSE Auto and BSE Bankex have slumped by almost 4% each followed by counters like Healthcare, PSU, Capital Goods, Oil & Gas, FMCG, Power, Realty, Consumer Durables and TECk, all declining between 1-3%. However, BSE Metal and IT indices are up 0.3-1%.
A sharp fall in banking stocks has seen the average price-to-earnings (P/E) ratio, an indicator of market valuations, of S&P BSE Bankex dip to over four-year-low of 9.53, indicating that investors are willing to pay much less for banking shares at present.
Most of the frontline banking stocks has fallen like nine pins after the recent measures taken by the Reserve Bank of India (RBI) to tighten liquidity to stabilise the Indian rupee. The BSE banking share index, Bankex, has tanked nearly 23% since July 15, as compared to 9.2% fall in benchmark S&P BSE Sensex.
Most of the banking stocks including public sector as well as private sector are trading at their multi years low. ICICI Bank, Bank of Baroda, Axis Bank, Punjab National Bank, Canara Bank, Bank of India, YES Bank and Union Bank of India are down 3-7% on NSE.
Shares of Axis Bank, India's third largest private lender, has slipped below Rs 1,000 mark in today's trade. Last the counter traded below this level was in September, 2012.
Auto stocks have been hit the hardest in today's trade.
Conglomerate Mahindra & Mahindra (M&M) took the largest beating as the counter lost a little over Rs 46 or 5.5% on the stock exchanges. It was trading at Rs 798.8.
It was followed by India's third largest two-wheelers maker Bajaj Auto, which is trading 4% down. Bajaj, which was reeling under workers' strike till last week, could see its shares surge as reaction to strike end. But the momentum failed to sustain and the counter lost well over Rs 75 on Monday morning trade to Rs 1,774.85.
Hero MotoCorp and Tata Motors are among the other top Auto makers which took a severe beating on a day when benchmark indices continued their steep decline for the second trading session in a row.
Other notable losers are Bharti Airtel, ONGC, Cipla, Sun Pharma, L&T, BHEL and NTPC.
Meanwhile, metal stocks have bucked the trend in today's trade on the stock exchanges.
Shares of Sterlite Industries, Tata Steel, Hindalco and Jindal Steel are all in the green.
The market breadth in BSE remains weak with 1,427 shares declining and 655 shares advancing.
