The rush to square deals before the expiry of futures and options contracts for April and the overall hit on the market mood due to recent retrospective tax notices to some foreign funds, led key equities indices in India take a further hit on Thursday.
This was the third straight week for key benchmark indices to end in the negative territory.
There was also lack of institutional support as traders were busy settling their deals for this month, in what has been a curtained trading week, as markets will remain closed on Friday due to Maharashtra Day and May Day.
As a result, the sensitive index (Sensex) of the Bombay Stock Exchange (BSE) fell sharply once again on Thursday to a fresh four-month closing low. The key index lost 214.62 points or 0.79 percent to end at 27,011.31 points, against the previous close at 27,225.93 points.
It touched a high of 27,242.05 points and a low of 26,897.54 points in the day's trade. Since March 4, when the index touched an a record peak of 30,024.74 points, the 30-share bellwether has lost 10 percent.
"The government's stance on capital gains tax, delay in the passage of key reform-centric legislative proposals, weak fourth quarter corporate earnings and gloomy monsoon forecast is likely to further dent rural demand and kept the risk-appetite under check," said brokerage Sharekhan.
"Global cues also turned weak on lower-than-expected growth in the US economy for the first quarter at 0.2 percent, significantly lower than 2.2 percent in the previous quarter, and cautious comments from the US Federal Reserve."
The wider Nifty of the National Stock Exchange also closed 58.25 points or 0.71 percent lower. The rupee also fell by 12 paise at 63.42 against the US dollar.
"If in coming session Nifty sustains above the 8,140 point level, then traders may see some trend reversal, which could lead Nifty to 8,210 points, followed by 8,310-point level," said HDFC Securities.
"If Nifty does not sustains above the 8,180 level, then traders may see fall in Nifty to continue up to 8,140 level followed by 8,100 level."
In Thursday's trade, heavy selling pressure was seen in the stocks for metals, fast moving consumer goods and auto sectors, while some good buying was observed in realty sector.
Foreign funds remained net sellers to the tune of $109.53 million on Thursday.
Among the 12 sector-specific indices of the Mumbai bourse, metal index plunged by 1.60 percent, FMCG index dropped by 1.20 percent and auto index fell by 1.05 percent. However, realty index gained by 1.54 percent.
The 100-scrip and 200-scrip indices also fell 0.58 percent and 0.46 percent, respectively, while mid-cap index ended marginally higher by around 0.07 percent. Small-cap stocks ended 0.15 percent lower.
The major Sensex gainers on Thursday were: Axis Bank, up 2.70 percent at Rs.567.85; BHEL, up 2.13 percent at Rs.237.20; and Sesa Sterlite, up 1.38 percent at Rs.210.
The losers were: HDFC, down 2.70 percent at Rs.1169.40; Tata Steel, down 2.37 percent at Rs.360.50; and Mahindra & Mahindra, down 2.25 percent at Rs.1145.15.
Among the Asian markets, Japan's Nikkei went down by 2.69 percent, China's Shanghai Composite Index went down by 0.76 percent, and Hong Kong's Hang Seng also dropped by 0.94 percent.
In Europe, London's FTSE 100 fell by 0.03 percent, France's CAC 40 went down by 0.13 percent, while Germany's DAX Index was higher by 0.38 percent at the closing in the Indian markets.
