Panic selling ahead of crucial cues over the possibility of a US rate hike, geopolitical volatility on re-emergence of security concerns in Paris, the dwindling rupee value and profit bookings subdued Indian equity markets and ended a two-day relief rally on Wednesday.
Both the bellwether indices of the Indian equity markets ceded their gains made during the two-day relief rally which started on Monday. The barometer index gained 254 points during the relief rally.
However, the rally came to an abrupt end, as negative global cues eminating from heightened chances of a US rate hike, gun firing incidents in Paris, fall in commodity prices, dwindling rupee value and profit bookings, subdued sentiments.
Investors were spooked ahead of the release of the minutes of the October meeting of federal open market committee (FOMC) which will give further cues on whether or not the US Fed will raise interest rates in December.
Furthermore, volatility was flared on the back of Japanese monetary policy review which is slated to end on Thursday and concerns over the H1-B visa issue and its impact on the information technology (IT) sector.
In addition, investors were anxious over the proposed strike by the Reserve Bank of India (RBI) employees on Thursday. The strike would be the first in more than six years and is expected to disrupt bond and foreign-exchange markets for a day.
On Wednesday, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) which opened flat during the morning session in line with global cues, notably from the Asian peers, closed deep in the red.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) closed in the red. It was lower by 105.75 points or 1.35 percent at 7,731.80 points.
The S&P BSE Sensex which opened at 25,837.71 points, closed at 25,482.52 points, down by 381.95 points or 1.48 percent from its previous day's close at 25,864.47 points.
The Sensex touched a high of 25,890.36 points and a low of 25,453.32 points in the intra-day trade.
The barometer index had closed the previous day's trade with gains of 104 points or 0.41 percent.
Market observers cited that investors were spooked ahead of the release of FOMC minutes and volatility caused due to security concerns in Europe.
"The FOMC minutes release clouded sentiments and flared uncertainty which was supported by apprehension over the ongoing global onslaught over terror and security concerns in Europe," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
"The cascading impact of both the events led to long-liquidation by investors, as they were spooked due to the sudden downturn and tried to mitigate losses."
Besides equities, the rupee too was battered in the day's trade. It closed Wednesday's trade lower by 27 paise at 66.30 to a US dollar from its previous day's close of 66.03 to a greenback.
The foreign institutional investors (FIIs) were net sellers in the day's trade at stock exchanges, whereas the domestic institutional investors (DIIs) were net buyers.
According to data with stock exchanges, the FIIs sold stocks worth Rs.768.46 crore, while the DIIs bought stocks worth Rs.759.26 crore.
Nitasha Shankar, vice president for research with Yes Securities, told IANS: "All major indices ended in the red indicating weakness present in our markets. Market breadth ended in favour of the bears with 1,048 advances and 1,619 declines."
Sector-wise, banking, information technology (IT), automobile, metal and technology, entertainment and media (TECK) came under heavy selling pressure.
However, consumer durables stocks bucked the trend.
The S&P BSE banking index plunged by 383.03 points, IT index receded by 247.24 points, automobile index declined by 154.84 points, metal index was lower by 109.57 points and TECK index fell by 105.77 points.
The S&P BSE consumer durables index ended higher by 31.16 points.
Major Sensex gainers during Wednesday's trade were Gail, up 0.95 percent at Rs.309.45; Coal India, up 0.83 percent at Rs.334.95; NTPC, up 0.72 percent at Rs.133.15 and Sun Pharma, up 0.08 percent at Rs.753.95.
The major Sensex losers were Hindalco Industries, down 5.07 percent at Rs.76.70; Infosys, down 3.89 percent at Rs.1,019.85; Tata Steel, down 3.69 percent at Rs.225.85; Vedanta, down 3.10 percent at Rs.89.20; and State Bank Of India (SBI), down 2.80 percent at Rs.241.05.
