Mumbai: Dropping for the fourth straight session, the Sensex Thursday slumped to its six-month low amid heightened risk aversion, sparked by foreign capital outflows and lingering worries over the government's demonetisation decision.
BSE benchmark Sensex slumped over 71 points in choppy trade to hit about six-month low of 26,228, while the Nifty failed to hold on to the crucial 8,100-mark.
"The impact of currency crunch continues to disrupt the market's momentum and it is oscillating between gains and losses and finally ended in negative. The fear of any downgrade in earnings has pushed investors to stay on the sidelines," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.
Trading sentiment remained distinctly weak due to cash crunch arising out of the government's move to demonetise Rs 500 and Rs 1,000 notes to flush out black money amid concerns about its impact on small and medium-sized businesses which largely run on cash.
The 30-share Sensex resumed higher at 26,304.90 and hovered in a range of 26,449.87 and 26,155.40 before ending at 26,227.62, showing a loss of 71.07 points or 0.27 percent. The index had last settled at 25,881.17 on May 25, 2016.
Sensex has dropped 1,290.06 points or 4.69 percent in the last four days.
Shares of telecom, teck, IT, finance and banking sectors moved down due to selling pressure, while utilities, power, metal, refinery and healthcare firmed up on good buying.
Software exporters such as TCS, Infosys and Wipro lost up to 2.20 percent after industry body Nasscom yesterday lowered the sector's growth outlook to 8-10 percent for the current fiscal in view of global uncertainties and currency volatility.
The 50-share Nifty dropped by 31.65 points or 0.39 percent to 8,079.95, closing below the 8,100-level after nearly six months. The Nifty had last settled at 8,069.65 on May 26, 2016.
Foreign funds continued their selling pressure, offloading shares worth a net Rs 1,957.04 crore yesterday, as per provisional data released by the stock exchanges.
Participants are awaiting Fed Chair Janet Yellen's testimony later today to get a sense of where the US economy is headed in the aftermath of Donald Trump's victory in the presidential poll.
In overseas markets, European and Asian stocks witnessed a mixed trend.
Key indices in China, Japan, Singapore, South Korea and Taiwan firmed up to 0.70 percent, while Hong Kong index eased by 0.08 percent.
European shares, after a lower beginning, turned positive in late morning deals.
The BSE Mid-Cap index provisionally fell 0.38 percent, while the small-cap index lost 0.57 percent.
A total of 16 scrips out of the 30-share Sensex pack ended lower, while 14 closed higher.
Major loser was Bharti Airtel, which was down 4.26 percent. The company announced the completion of the merger of its subsidiary Airtel Bangladesh with Robi Axiata, a unit of Axiata Group Berhad.
It was followed by Bajaj Auto (2.55 percent), TCS (2.20 percent), Coal India (2.08 percent), Asian Paints (1.72 percent), Hero MotoCorp (1.25 percent), HDFC Bank (1.14 percent), Infosys (1.12 percent) and Maruti (1.01 percent).
However, shares of auto major Tata Motors surged 3.21 percent at Rs 475. The stock hit a high of Rs 476.20 and a low of Rs 459.80 in intra-day trade.
It was followed by Power Grid (2.66 percent), Gail (1.52 percent), Cipla (1.12 percent), NTPC (1.00 percent) and HUL (0.86 percent).
Among BSE sectoral indices, telecom fell 2.45 percent, followed by Teck (1.66 percent), IT (1.38 percent), financial service (0.16 percent), Bankex (0.09 percent) and capital goods (0.08 percent).
However, utilities rose by 1.14 percent, power 0.93 percent, metal 0.50 percent, oil&gas 0.36 percent and healthcare by 0.36 percent.
Market breadth remained negative as 1,671 shares ended lower, 943 closed higher while 158 ruled steady.
Total turnover on BSE fell sharply to Rs 2,660.23 crore from Rs 4,302.99 crore registered during the previous trading session.
Globally, other Asian markets ended mixed with Hong Kong's Hang Seng falling 0.08 percent, while Japan's Nikkei ended flat. Shanghai Composite Index, however, was up 0.11 percent.
Foreign direct investment (FDI) into China rose 4.2 percent year-on-year to reach 666.3 billion yuan in the first ten months of the year, official data showed today.
European shares, after a lower beginning, turned positive in late morning deals. London's FTSE gained 0.24 percent, Paris CAC was up 0.01 percent, while Germany's DAX shed 0.17 percent.