Disappointment over earning results, combined with negative global cues and a weak rupee dragged the Indian equity markets to their lowest levels in over 21 months during the just-concluded weekly trade.
Indian equity markets declined for four consecutive sessions to post their biggest weekly loss since July, 2009.
Weak crude oil prices amid negative global indices and discouraging international macro-economic data, painted a grim picture for investors.
Despite some recovery on Friday due to short-covering, both the bellwether indices ended the week below the psychologically important levels of 23,000 and 7,000-point marks, respectively.
The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE) plunged by 1,630.85 points or 6.62 percent to 22,986.12 points.
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Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) receded by 508.15 points or 6.78 percent to 6,980.95 points.
Sector-wise, realty index depleted by more than 11 percent, followed by capital goods index which dived by 8.8 percent, metals index plummet by 8.2 percent and oil and gas index was down by 8.1 percent.
Global indices, too, took a beating with the Nikkei losing 11 percent, while the Hang Seng was down five percent. The French CAC and London's FTSE lost between 4-5 percent.
"Markets ended the week sharply in the red with deep cuts witnessed in first four sessions this week," Vaibhav Agarwal, vice president and research head at Angel Broking, told IANS.
"The weakness was largely on account of global headwinds such as growth concerns, fall in crude prices and issues in the banking sector."
Nitasha Shankar, vice president for research with YES Securities, specifically cited that broader markets slumped due to heavy selling in the mid and small cap space.
"Banking index continued to slide southwards, witnessing massive declines after weak earnings report from the PSU banks," Shankar elaborated.
"Market defensives like pharma, FMCG and IT stocks came under severe pressure as selling was seen across all major sectors. Telecom, however, ended in the green providing some support to the index."
Further, volatile crude oil prices flared volatility through-out the week under review.
In addition, the selling frenzy by foreign investors, not only dampened equity markets sentiment, but also drowned rupee's value.
Dhruv Desai, director and chief operating officer at Tradebulls, noted: "Foreign institutional investors selling in the absence of buying has hurt prices even more."
"The European market spreading negative impact to all Asia and continuing bad US jobless data, crude oil fall increase the chances to interest rate rise."
On a weekly basis, the rupee weakened by 59 paise to 68.23-24 (February 12) against a US dollar from its previous close of 67.64-65 to a greenback (February 5).
On Friday, the Indian rupee touched its lowest level since early September 2013 at 68.47 mark on the spot market.
"The global-risk off sentiment, low demand, weak investment and tightening of US monetary policy, coupled with Chinese economic woes have all impacted the rupee value during the last week," Anindya Banerjee, associate vice president for currency derivatives with Kotak Securities, told IANS.
The weakness in the India rupee's value indicates the massive outflow of foreign funds from the equity and debt markets.
The National Securities Depository Limited (NSDL) figures showed that the FPIs (Foreign Portfolio Investors) sold Rs.3,860.62 crore or $568.22 million in the equity and debt markets from February 8-12.
The data with stock exchanges disclosed that the FPIs divested stocks worth Rs.3,027.62 crore during the week under review.
Conversely, the data showed that domestic institutional investors (DIIs) bought stocks worth Rs.2,069.46 crore.
Nevertheless, the markets stabilised somewhat and closed on a flat-to-positive note on Friday.
The minute gains were made on account of short-covering, value buying and strengthening of crude oil prices.
(Rohit Vaid can be contacted at rohit.v@ians.in)
