Key Indian equity indices on Friday witnessed the steepest fall since November 2016, on the back of escalating geo-political tensions between North Korea and the US, a weak rupee and heavy selling pressure in capital goods, metal and banking stocks.
Market observers pointed out that investors' sentiments were hampered by a likely US rate-hike in December which was signalled by the US Federal Reserve on Wednesday night. The move can potentially lead foreign portfolio investors (FPIs) away from emerging markets such as India.
Besides, investors remained cautious about the government's plans for a stimulus programme which might lead to fiscal deficit.
The wider Nifty50 of the National Stock Exchange (NSE) slipped below the psychologically important 10,000-points-mark, to close at 9,964.40 points -- down 157.50 points or 1.56 per cent.
The 30-scrip Sensitive Index (Sensex) of the BSE, too, plunged by 447.60 points, or 1.38 per cent, to end below its psychologically important 32,000-points-level at 31,922.44 points.
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"The main indices -- NSE Nifty50 and BSE Sensex -- fell steeply during the day's trade. This was the largest fall for both the indices on an intra-day and overall closing basis since November 11, 2016," Deepak Jasani, Head - Retail Research, HDFC Securities told IANS.
"The weakness came on the back of geo-political tensions as North Korea threatened that it could consider testing a nuclear weapon in the Pacific."
According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, concerns over the government's plan for a stimulus to halt the economic slowdown -- which might lead to fiscal deficit -- eroded investors risk-taking appetite.
"In view of the economic slowdown, the government is reported to be open to allowing the fiscal deficit to exceed this year's target as it considers a stimulus package in the range of Rs 40,000-50,000 crore by way of increased spending," Desai told IANS.
In terms of the broader markets, the S&P BSE mid-cap index tanked by 2.71 per cent and the small-cap index by 2.93 per cent.
In terms of investments, provisional data with the exchanges showed that foreign institutional investors (FIIs) sold scrips worth Rs 1,241.73 crore while domestic institutional investors (DIIs) purchased stocks worth Rs 521.17 crore.
"The rupee fell sharply today to breach the 65-mark against the US dollar but recovered later. The rupee fell to a nearly six-month low of 65.14 against the US dollar -- its lowest since April this year," Desai added.
During the day, the rupee closed at 64.79-80 against the US dollar.
Sector-wise, all the 19 sub-indices of the BSE closed in the red, led by capital goods (down 603.52 points), metals (down 554.26 points) and banking (down 526.84 points) indices.
Major Sensex gainers on Friday were: Wipro, up one per cent at Rs 294.05, and Coal India, up 0.12 per cent at Rs 253.90.
Major Sensex losers were: Tata Steel, down 4.70 per cent at Rs 654.55; Larsen and Toubro, down 3.49 per cent at Rs 1,184.90; Reliance Industries, down 2.83 per cent at Rs 817.50; ICICI Bank, down 2.77 per cent at Rs 277.10; and Hero MotoCorp, down 2.59 per cent at Rs 3,788.15.
--IANS
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