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Stocks on Thursday fell by more than two per cent on the back of strong global market concerns.
The BSE Sensex lost a massive 405 points or 2.3 per cent to close at 17,196. The Nifty declined by 2.5 per cent or 136 points to close at 5,228.
The two benchmark indices were moving rather flat until the opening of the European markets, after which stocks plunged. “The global markets are coming under pressure. Concerns around Europe continue even though the liquidity situation has improved,” said Mr Ravi Gopalakrishnan, Executive Director and Chief Investment Officer – Equity, Pramerica Asset Managers.
The European markets were down by more than one per cent at the time of closing of the Indian markets.
Apart from the global cues, domestic concerns like the leaked CAG report added to the chaos, said market analysts.
The CAG had reportedly pointed out that between 2004 and 2009, the government had awarded contracts for coal mines to private and public companies without following the auction route. “There was heavy-selling in the metal and power sector stocks which started post the uproar in the Parliament regarding the CAG report on coal mines. A large number of long positions which had been taken at 5,400 (Nifty) were liquidated today,” said Mr Alex Mathew, Head of Research, Geojit BNP Paribas Financial Services.
Stocks such as Jindal Steel, JSW Steel and Lanco Infra were down more than seven per cent, while JSW Energy was down 9.2 per cent. Reliance Infra, GVK Power, GMR Infra, Tata Steel and Tata Power were some of the other stocks which were hammered badly.
Rupee battered
The rupee closed at 51.22 against the dollar a level last seen more than two months ago.
“The rupee has been weak over the last few days due to month-end dollar demand from oil companies, which have to settle their bills before March-end,'' said a forex dealer with a public sector bank. The rupee would continue to be under pressure till end-March as most participants would hold onto their dollar stocks, said a dealer with a private bank.
According to forex dealers, the Reserve Bank of India may have sold dollars to arrest the rupee volatility. The domestic currency opened lower at 50.80. It moved down in a one-way direction and closed 55 paise lower than the previous close of 50.67. During the day it touched a low of 51.27 before recovering slightly towards close. This indicates that the RBI may have stepped in to sell dollars.
FIIs were net buyers of equities for Rs 246 crore on Thursday on both the exchanges. DIIs were net sellers for Rs 133 crore. Retail investors were net buyers for Rs 114 crore on the BSE.
Following the RBI tightening lending norms for gold-loan companies, the stocks of NBFCs fell. The stock of Manappuram was down 18.5 per cent, while that of Muthoot was down by 10 per cent. The Muthoot scrip also hit a 52-week low of Rs. 130.30/share.
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