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Indian shares closed at five-week lows after the US Federal Reserve Governor reiterated the possibility of raising interest rates in December, while caution ahead of Bihar state exit polls accelerated the selloff.
The benchmark BSE index ended down 0.94 per cent or 248.72 points at 26,304.20 , closing at its lowest level since October 1.
The broader NSE index finished down 84.75 points or 1.05 per cent at 7,955.45, also closing at its lowest level since October 1. Volatility was down 0.32 per cent with India Vix ending at 19.29.
The index has booked losses in eight out of the last nine sessions.
Both indices marked their biggest single-day percentage loss since September 22.
Yellen on Wednesday pointed to a possible December interest rate "liftoff" but said rates would rise only slowly from then on.
Bihar exit polls
Sentiment was also cautious ahead of the results from Bihar state's assembly elections. A victory in the State is seen as critical to Prime Minister Narendra Modi's plans to improve his party's strength in the upper house of Parliament and raise optimism about passage of his reform agenda.
Exit polls are due later on Thursday and results will be out on Sunday.
"While Bihar polls will not impact national politics ... they will influence the market's perception of reforms," analysts at Bank of America Merrill Lynch wrote in a research report.
The BSE Sensex after opening a shade higher quickly turned negative and finally settled the day lower 248.72 points, or 0.94 per cent, at 26,304.20 after selling pressure accelerated towards the fag end. The gauge had lost 37.67 points in yesterday’s choppy session.
Among Sensex constituents, Vedanta Ltd suffered the most by plunging 4.66 per cent while Sun Pharma dived 4.28 per cent after its US—listed subsidiary Taro Pharma reported disappointed earnings.
Tata Steel plunged 4.33 per cent ahead of its quarterly earnings later in the day.
Other losers which contributed to the fall in the key indices were BHEL, Bharti Airtel, GAIL, Cipla and Axis Bank.
As many as 23 Sensex stocks fell.
However, Coal India, NTPC, Hero MotoCorp, ITC, M&M and Maruti Suzuki scooped up gains.
Meanwhile, FPIs bought shares worth Rs 33.16 crore yesterday, as per the provisional data.
Sectorwise, BSE realty index fell the most by dropping 2.63 per cent, followed by healthcare, banking, technology and IT.
In line with the overall trend, small-cap and mid-cap indices also ended in the red with losses of up to 1.59 per cent.
Disappointing earnings from Ashok Leyland late Wednesday hurt the stock. It shed 5.8 per cent to end at Rs 86.80. Unitech lost 6.83 per cent and was the biggest percentage loser among BSE largecap stocks.
Global markets
European shares retreated on Thursday as commodity-related stocks were sold off heavily on a stronger dollar and some companies slumped after reporting disappointing results.
The European mining index fell 1 per cent after major industrial metals such as copper, aluminium and nickel fell about 1 per cent. Metals prices came under pressure from a rally in the dollar after Federal Reserve Chair Janet Yellen pointed to a possible December interest rate hike.
A stronger US currency generally makes dollar-priced commodities costlier for holders of other currencies and hits metals demand.
"We are seeing a rotation out of commodity-related sectors, driven by a stronger dollar on prospects of a US rate hike," said Gerhard Schwarz, head of equity strategy at Baader Bank in Munich.
"The earnings season has also been mixed. Overall, we have to admit that European earnings have been far weaker than expectations a couple of months ago. The currency tailwind in Europe is offset by weak commodity prices."
Thomson Reuters Datastream shows that analysts' expectations for European earnings growth in 2015 have slipped to less than 1 per cent from about 10 per cent at the start of the year.
In Europe, about 60 per cent of companies have reported results so far, of which half have met or beaten analysts' earnings predictions, while the rest have missed, according to Thomson Reuters StarMine data.
The FTSEurofirst 300 index was down 0.2 per cent at 1,498.40 points by 0912 GMT, having closed up 0.5 per cent the previous day.
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