Sensex plunges 430 points on profit-booking, surge in trade deficit

There was a blood-bath in the equity market on Monday as a wave of selling, triggered by several factors such as profit-booking and the ballooning trade deficit, shaved 430 points off the Sensex, which ended at a week’s low, leaving investors poorer by Rs 1 lakh crore.

Ignoring a fall in retail inflation to 9.4 per cent, April trade deficit data at $17.8 billion weighed on the stock market and the Sensex closed at 19,692 and the Nifty shed 127 points to close at 5,980. Weakness in global markets also kept the market subdued.

This is the biggest fall since the Sensex lost nearly 478 points on February 27, 2012. All 30 Sensex-based scrips closed with sharp to moderate losses, with ITC suffering an over 5 per cent drop after its recent rally. L&T, TCS, ICICI Bank, Tata Motors, RIL and HDFC Bank were among the major losers. Bharti Airtel and Tata Steel fell by over 4 per cent each.

Foreign institutional investors bought net equity worth Rs 244 crore while domestic institutional investors offloaded equity in the net worth Rs 455 crore.

Ajit Mishra, Assistant Vice-President - Retail Research, Religare Securities, said: “Disappointing trade deficit figure and weakness in European and Asian markets took the Nifty below the psychological mark of 6,000. One should avoid over-leveraging at current levels.”

Kotak Mahindra Bank Chief Economist Indranil Pan, said: “The key to this drop in consumer price index has been cereals, vegetables, fruits and oil inflation. The food-driven drop in the CPI is expected to continue and we could end the year at 7.5-8 per cent on CPI, also on the back of a significant base effect. Further, components of transport and communication, personal care and effects and household requisites were also lower during the month, probably indicative of a lower demand side pressure.”

There was blood—bath in markets today as a wave of selling, triggered by a slew of factors like profit—booking and ballooning trade deficit, shaved over 430 points off Sensex —— its biggest fall in 14 months —— to end at 1—week low,leaving investors poorer by Rs 1 lakh crore.

Ignoring a fall in retail inflation to 9.4 per cent, April trade deficit data at USD 17.8 billion weighed on the stock market as the BSE benchmark ended 430.65 points lower, or 2.14 per cent, at 19,691.67. This is the biggest fall since Sensex lost nearly 478 points on February 27, 2012.

Selling was seen across—the—spectrum as all 13 sectoral indices closed with losses in 0.94—3.17 per cent range with FMCG, capital goods, metal and auto shares leading downslide.

All 30 Sensex—based scrips closed with sharp to moderate losses with ITC suffering over 5 per cent drop after recent rally. L&T, TCS, ICICI Bank, Tata Motors, RIL and HDFC Bank were among major losers. Bharti Airtel and Tata Steel fell by over 4 per cent each.

“Poor trade deficit data sparked off worries on the CAD front. A weak rupee that went close to 55—level also hit sentiments. Political situation is sensitive after two ministers resigned. Stocks had gone up substantially recently and so some correction was in the offing,” said Gautam Sinha Roy, VP — Equities, Motilal Oswal Securities Ltd.

Similarly, the broad—based 50—issue CNX Nifty of the NSE also slumped by 126.80 points, or 2.08 per cent, to end below 6K—mark at 5,980.45. The MCX—SX flagship index SX40 closed 228.64 points, or 1.92 per cent, lower at 11,662.34 points.

Market breadth was negative as 1,542 stocks closed down while just 808 finished higher. BSE market capitalisation fell by over Rs 1 lakh crore to Rs 67.03 lakh crore today.

Weakness in global markets also kept the market subdued.

PTI adds:

Globally, Asian stock indices closed mixed with downward bias with sentiment hit by selling in commodities triggered by a strong dollar. European markets were trading weak in their early trade.

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