Derivatives expiry, higher food inflation and lower earnings also weigh on indices.
Indian stock indices tumbled as investors booked profit in banks, FMCG and real estate stocks today, the expiry day for November derivatives.
The Bombay Stock Exchange (BSE) Sensitive Index, or Sensex, had a flat start at 17,199.05 on the back of weak global cues. The index exhibited lacklustre movement till late-morning trades. Then, taking cues from Asian markets, which were battered badly, the index began to extend losses.
The Shanghai Composite Index slumped 3.62 per cent on fear of government intervention to arrest surging asset prices while the Jakarta Composite Index slipped 2.76 per cent.
Heavy selling due to derivatives’ unwinding and weak cues from European markets further dampened the sentiment in late-noon deals. The Sensex plunged to a low of 16,809 and finally closed at 16,854.93, down 344 points, or 2 per cent. The NSE Nifty settled at 5,005.55, down 102.60 points.
Shares of Reliance Industries were in focus as they were trading ex-bonus for the first day today. The company had announced bonus shares in the ratio of 1:1 in early October, for which November 27 was set as the record date. The stock closed at Rs 1,065, down nearly 3 per cent on adjusted prices.
All sectoral indices exhibited weakness. The Bankex shed 2.64 per cent, the oil & gas index slipped 2.3 per cent and the realty index was down 2.11 per cent.
The market breadth was negative. Out of 2,817 shares traded, 1,877 (66.63 per cent) declined and 864 (30.67 per cent) advanced on the BSE. ICICI Bank was among the major losers on the BSE, down 3.74 per cent. Tata Steel slumped 3.34 per cent after the company reported a net loss of Rs 2,719.80 crore.
Mahindra & Mahindra (3.1 per cent) and State Bank of India (3.01 per cent) were some of the prominent draggers. ITC, Maruti, Reliance Infrastructure, HDFC Bank, Wipro, TCS and DLF declined 2-3 per cent.
Hindustan Unilever, Sun Pharma , ACC and Hero Honda were marginal gainers (up about 0.5 per cent).
Other stocks in which major movement took place were EIH, which strengthened on news that ITC is mulling a counter offer or a stake sale. It closed up 4.5 per cent. Mahindra Satyam, which opened 8 per cent lower for the fourth consecutive day on concerns that losses due to the alleged fraud might stretch further, erased its losses to end 2.5 per cent higher at Rs 93.
Tata Steel topped the value charts, clocking a turnover of Rs 252.33 crore, and IFCI saw 12.12 million shares change hands on the BSE.
“The weakness is attributed to the F&O expiry day,” said Bhavin Desai, manager, derivatives, Motilal Oswal Financial Services. Desai said the market had been cautious since last week. He expects cement to do well because of the build-up through the month.
Bhavin sees the Nifty moving in the band of 4,900-5,200 in the December series.
