Indian markets nosedived over 2.7 per cent at the end of the session on Thursday on heavy capital outflows as the rupee hit a life-time low of 60 against the dollar amid a weak trend in the global market.
Foreign institutional investors sold shares worth Rs 544.97 crore yesterday, as per provisional data from the stock exchanges.
Global sentiment was hit after Federal Reserve Chairman Ben S. Bernanke said that the bank may end bond purchases next year if the economy strengthens in line with forecasts.
Concerns about the health of the Chinese economy weighed on the market sentiment after China's purchasing managers' index contracted further to 48.3 in June from May's final reading of 49.2.
The 30-share BSE index Sensex was down 526.41 points (2.74 per cent) at 18,719.29 and the 50-share NSE index Nifty was down 166.35 points (2.86 per cent) at 5,655.90.
All BSE sectoral indices posted steep losses. Among them, realty, metal, banking and power succumbed to heavy selling pressure and were down 5.18 per cent, 4.63 per cent, 3.98 per cent and 3.29 per cent, respectively.
Among 30-share Sensex, Jindal Steel (down 9.62 per cent), Tata Steel (-6.25 per cent), Hindalco (-6.24 per cent), BHEL (-4.99 per cent) and Sterlite (-4.52 per cent) were the top five losers, while Wipro (1.28 per cent) and Sun Pharma (-0.69 per cent) were the only two gainers.
European stocks sank and Asian shares tumbled to nine-month lows after the US Federal Reserve Chairman Ben Bernanke had on Wednesday confirmed that the central bank will stop its $85-billion bond buying programme later this year as the economic conditions have improved.
But Bernanke also said that the Fed would withold from tapering if the economic conditions deteriorated.
In the Asian trade, Japan’s Nikkei 225 shed 230.64 points or 1.74 per cent to 13,014.58 and Hong Kong’s Hang Seng slumped 547.45 points or 2.61 per cent to 20,439.44.
Stoxx 50 shed 64.46 points or 2.4 per cent to 2,619.52, FTSE 100 dipped 138.29 points or 2.18 per cent to 6,210.53 and DAX declined 196.93 points or 2.4 per cent to 8,000.15.
US stocks tumbled more than one per cent on Wednesday and the benchmark 10-year US Treasury yield surged to 2.37 per cent, a fresh 15-month high, while the dollar advanced broadly on the back of the rising yields.