Mumbai: The stock markets on Wednesday took a beating with the Sensex plunging below the psychological 16,000 barrier and the rupee plummeting along to historic low levels of 54.56 as deepening Eurozone crisis drove investors to shift capital away.
With the rupee sliding to record low levels, jittery foreign funds resorted to aggressive selling pulling down the key index below 16,000 level for the first time in a little more than 4 months.
Though it managed to close at 16,030.09--a drop of 298.16 points or 1.83 percent-- a whopping notional loss of Rs 77,000 crore for investors -- in a session in which 6 out of 10 stocks fell across the counters.
Finance Minister Pranab Mukherjee attributed the market slide to Euro crisis and other international difficulties.
Referring to the crisis in eurozone and its impact on India, he told Rajya Sabha that government would resort to some sort of austerity measures whether people like it or not to convey a signal that it was responding to the situation.
His pep talk seems to have bolstered the sentiment as the Sensex regained nearly 50 points at the fag-end.
Market analysts, however, said besides global cues, sharp rupee depreciation for markets was a big concern.
According to Kishor P Ostwal, CMD, CNI Research, the market will continue to remain bearish if rupee falls further.
"If rupee bounces back, equity markets will also bounce back very sharply. Possibly, we can again see dead cat bounce tomorrow," he said.
The domestic currency fell to an all-time low of 54.56 against the US dollar but later recovered marginally to end the session at 54.50, down by 70 paise.
No counter could escape the investor wrath as selling was across-the-board with all BSE sectoral indices closing with losses. Among the 30 Sensex stocks, 28 counters logged losses.
Among Sensex stocks, Tata Motors was the biggest loser dropping 7.34 percent on a 29 percent drop in April vehicle sales of JLR.
"Tata Motors has significant sales contribution from Euro region and political turmoil in Europe is expected to adversely affect the company?s performance," said Sharmila Joshi, Head Equity, Fairwealth Securities.
Among sectors, BSE-Metal was the worst performing closing 2.68 percent down, followed by BSE-Auto (2.59 pc), BSE-Consumer Durables (1.94 pc), BSE-Capital Goods (1.69 pc) and BSE-Bankex (1.65 pc).
The NSE broader 50-issue Nifty also plunged by 84.55 points or 1.71 percent to below 4,900-mark to settle at 4-month low of 4,858.25.
A depreciating rupee raises import costs, thereby pushing up prices of important items in the economy. Experts also attributed the fall of rupee to a slew of factors such as concerns over a record trade deficit, which widened to over 10.9 percent of gross domestic product in the last fiscal, and deteriorating economic fundamentals.
"The global and local factors are showing tremendous impact on Indian Rupee... There will be an impact on importers, exporters and corporates," SMC Investments and Advisors CMD D K Aggarwal said.
On the global stock market front, Asian shares settled sharply lower today after Greece failed to form a government, setting the stage for a June election that could raise the risk of the nation abandoning the Euro, said dealers.
Key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan finished with losses between 1.12 percent and 3.19 percent.
European markets too were trading lower but recovered some of its lost ground in afternoon trade. Germany's DAX and the UK's FTSE were down by nearly 1 percent. France's CAC was marginally up.
In Sensex, major losers included Tata Steel (3.89 pc), BHEL (3.74 pct), HDFC (3.71 pc), Hindalco (3.28 pc), Wipro (3.26 pc), Jindal Steel (3.10 pc), DLF (2.86 pc), ICICI Bank (2.77 pc), Sun Pharma (2.12 pc) and Tata Power (2.01 pc). Infosys, Maruti Suzuki, Coal India, Bharti Airtel, NTPC, SBI, Gail, L&T, ITC and HUL lost up to 1.8 percent.
Only Sterlite Industries and Bajaj Auto ended with gains.
"Sentiments remain cautious on both global and domestic developments. Fresh buying should be avoided and rallies should be used to book profits...More downside cannot be ruled out," said Shanu Goel, Sr Research Analyst, Bonanza Portfolio.
The market breadth turned negative as 1,733 stocks ended with losses while 983 finished with gains. The total turnover improved slightly to Rs 1,847.18 crore from Rs 1,816.57 crore yesterday.
First Published: Wednesday, May 16, 2012, 16:46