Mumbai: Heavy selling by foreign investors on the back of the minimum alternate tax (MAT) dispute, free falling rupee value and disappointing fourth quarter results led to a benchmark index of the Indian equities market closing Tuesday's trade down 630 points or more than two percent.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) also closed the day's trade deep in the red. It closed 198.30 points or 2.38 percent down at 8,126.95 points.
The 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE), which opened at 27,502.91 points, closed the day's trade at 26,877.48 points, down 629.82 points or 2.29 percent from the previous day's close at 27,507.30 points.
The Sensex touched a high of 27,502.91 points and a low of 26,837.39 points in the intra-day trade.
Out of 2,803 companies whose shares are traded on the BSE, stocks of 1,962 firms declined while only stocks of 746 companies advanced in the day's trade. The scrip of 95 companies remained unchanged.
"The markets have fallen due to a combination of factors such as the falling rupee value, FIIs turning into net sellers, uncertainty over the US interest rate hike, higher commodity prices like crude oil, and increase in US 10-year bond yields," Devendra Nevgi, chief executive of ZyFin Advisors, told IANS.
The MAT on capital gains is expected to impact the margins of foreign funds. This has hit their investment appetite for the Indian equities' market.
According to data with the National Securities Depository Limited (NSDL), the Foreign Portfolio Investors (FPIs) had turned into net sellers in the Indian equities markets. They off-loaded shares worth Rs.354.75 crore or $55.39 million.
For the previous trading week ended May 8, FPIs sold stocks worth Rs.6,553.44 crore or $1.02 billion in the equities market.
The day's fall was also attributed to the decline in the Indian rupee's vale which further weakened against the dollar. by around 17 paise against the US dollar to Rs.64.17 per dollar around 4.30 p.m.
"Domestic factors such the outcome of the parliament session and the disappointing quarterly results have also dampened sentiments," Nevgi said.
Vinod Nair, head of fundamental research with Geojit BNP Paribas Financial Services said that: "Factors like increase in Europe bond yield, outperformance by other EMs and currency depreciation is impacting global inflow. Besides these, when the domestic earnings are downgrading and outcome from parliament session is shaky market is not taking it well."
"After posting strong gains in prior two trading days, key benchmark indices dropped today as caution prevailed ahead of release of macro-economic data," said brokerage Motilal Oswal.
"Delay in the passage of land acquisition and foods and services tax bill and intra-day depreciation in the rupee by nearly 41 paise to 64.26 against US Dollar also weighed on the sentiments," added another leading brokerage Sharekhan.
Another major trigger for the fall was the investor anxiety over the US Federal Reserve's reaction to the better-than-expected growth in the non-farm jobs in the US.
Growth in jobs has the ability to push the Federal Reserve to increase interest rates, thereby attracting funds back into the US equities' market.
Other jittery factor for investor is the release of crucial industrial production and inflation data. The data's will give cues on the Reserve Bank's ability to cut lending rates in its next monetary policy review scheduled on June 2.
In Tuesday's trade all 12 sector-based indices ended the trade in the red. The S&P BSE banking, capital goods, automobile, metal, oil and gas, information technology (IT), consumer durables, healthcare, technology, entertainment and media (TECK) and fast moving consumer goods (FMCG) indices came under heavy selling pressure.
The S&P BSE Bank index plunged by 644.42 points, followed by capital goods index which drowned by 508.65 points, automobile index receded by 344.41 points, metal index plummet by 302.77 points and oil and gas index decreased by 239.64 points.
The S&P BSE IT index declined by 191.23 points, consumer durables index edged lower by 152.51 points, healthcare index lost 115.77 points, TECK index fell by 110.08 points and FMCG index was down 89.61 points.
The major Sensex gainers on Tuesday were: Dr.Reddy's Lab, up 3.31 percent at Rs.3,473.50 and Hero MotoCorp, up 3.18 percent at Rs.2,459.90.
The losers were: Tata Steel, down 6.29 percent at Rs.353.15; BHEL, down 5.07 percent at Rs.222.65; Vedanta, down 4.98 percent at Rs.218.40; ICICI Bank, down 4.59 percent at Rs.308.55 and Tata Power, down 3.64 percent at Rs.71.50.
Among the Asian markets, Japan's Nikkei was higher by 0.02 percent, while China's Shanghai Composite Index gained by 1.58 percent and Hong Kong's Hang Seng moved down by 1.12 percent.
In Europe, London's FTSE 100 was down by 1.71 percent. However, France's CAC 40 was lower by 1.68 percent and Germany's DAX Index lost 2.04 percent at the closing in the Indian markets.