Sensex tanks 286 points as weak rupee, costly oil hurts

The wide-based National Stock Exchange index Nifty lost 86.65 points, or 1.48 percent, to close at 5,770.90.

Updated: Jul 03, 2013, 17:37 PM IST

Mumbai: The Sensex on Wednesday tumbled by 286 points to end at 19,177.76 as rupee breaching the 60-mark and draft norms on banks' exposure to corporates with unhedged forex triggered all-round selling, amid weak global cues.

Investor wealth worth Rs 1.1 lakh crore was wiped out as over 1,500 stocks led by realty, metal, PSU, consumer durables and power closed down on the BSE. Overall 11 out of 13 sectoral indices closed with losses of up to 4.76 percent while only BSE-FMCG and BSE-HC indices bucked the trend.

Weak world stock markets, worries over China's growth, growing crisis in Egypt and fears over political instability in Portugal, pushed up crude oil prices to USD 105 a barrel.

The Bombay Stock Exchange 30-share indicator resumed remarkably lower and continued to reel under pressure to end at 19,177.76, a fall of 286.06 points or 1.47 percent. Yesterday, it had dipped by 113.57 points or 0.58 percent.

Similarly, the 50-issue Nifty of the NSE also tumbled by 86.65 points, or 1.48 percent to end below 5800-mark at 5,770.90. Also, SX40 index, the flagship index of MCX-SX, closed 153.09 points, or 1.32 percent lower at 11,413.38.

RBI on Tuesday evening proposed incremental provisioning and capital requirements for banks' exposure to corporates having unhedged forex exposure. SBI, ICICI Bank and HDFC Bank scrips saw pressure. Hindalco, Sterlite Ind and Tata Steel from metal pack ended 3-4 percent down on China growth fears.

"There were reports that Egypt's military had drawn up plans to suspend the constitution..Portugal foreign minister resigned in protest against austerity measures. On top of it, Brent Crude has risen to USD 105 mark," said Sanjeev Zarbade, Vice President, PCG Research, Kotak Securities.

Fall in the rupee below 60-mark, slowdown in country's services sector activity in June, rising bad loans and capital outflows also hit the market sentiment, said traders.

Concerns over the rising oil prices that may widen the current account deficit, impacted negatively as it may prevent RBI from cutting interest rates later this month, they added.

Globally, Asian indices ended up to 2.5 percent lower while Europe was trading with deep 1.5 percent cut.

Asian stocks ended lower as concerns about growth in China's services sector added to selling pressure, amid investors adopting a cautious stance ahead of US data later this week. Key benchmark indices in China, Hong Kong, South Korea, Taiwan, Singapore and Japan fell by 0.31-2.48 percent.

European stocks were trading sharply lower following crisis in Egypt, political turmoil in Portugal and downbeat data from China. Key indices in France, Germany and UK fell by 1.52 percent to 1.56 percent.

Kishor P Ostwal, CMD, CNI Research Ltd said: "The run up was so sharp that some correction was overdue post the end of June settlement. Street had gone long above 200 DMA of Nifty at 5820 therefore on global cues and weakening currency, market gave up some grounds. Nifty next support lies at 5700."

Talking about draft norms on forex exposure, brokerage Emkay Global said the guidelines suggest higher provisions / risk weights for exposure to corporates with unhedged foreign currency exposures (UFCE). "Since provisions/risk weights apply to total banking exposure, it will impact banks...".

27 scrips out of the 30-share Sensex pack ended lower.

Major losers were Tata Power (4.90 percent), SBI (4.58 percent), Sterlite Ind (4.58 percent), Tata Steel (4.54 percent), Hindalco (3.61 percent), ONGC (3.48 percent), BHEL (2.99 percent), Bharti Airtel (2.81 percent), Wipro (2.72 percent), HDFC (2.68 percent) and L&T (2.60 percent).

RIL (2.41 percent), Dr Reddy's Lab (2.24 percent), Hero MotoCorp (1.65 percent), ICICI Bank (1.46 percent), Gail India (1.25 percent), Bajaj Auto (1.17 percent), Maruti Suzuki (1.15 percent), NTPC (1.06 percent), HDFC Bank (0.99 percent) and TCS (0.95 percent) were also among losers.

Among the sectoral indices, S&P BSE-Realty dropped by 4.78 percent, followed by S&P BSE-Metal (3.11 percent), S&P BSE-PSU (3.08 percent), S&P BSE-CD (2.84 percent), S&P BSE-Power (2.67 percent), S&P BSE-Oil &Gas (2.64 percent), S&P BSE-CG (2.46 percent) and S&P Bankex (2.33 percent).

Market breadth remained negative as 1,528 stocks ended down while 787 stocks closed with gains. Market turnover rose to Rs 1,922.79 crore from 1,794.68 crore yesterday.

Meanwhile, Foreign Institutional Investors sold shares worth a net Rs 43.20 crore yesterday as per provisional data from the stock exchanges.