The BSE Sensex on Thursday plummeted 388 points, or 1.9%, to 19,674 on Thursday in line with nervous global markets after concerns that the US may scale down its bond-buying stimulus to inject money supply for growth, even though its chairman Ben Bernanke signalled that the Fed was in no hurry to do so.
However, traders saw stability in the market influenced by global factors.
Tracking equities, the rupee also fell to an eight-and-a-half month low to below 56 against the US dollar as exporters sold the greenback on fears that the RBI would intervene to stabilise the local currency.
Even as finance minister P. Chidambaram moved to clarify that Bernanke had been misunderstood and there was no need for nervousness, stocks were hammered, the fall accentuated by other factors including below-expectation results from State Bank of India and lacklustre factory output data in China.
The index has fallen 612 points, or 3.0%, in the last four trading sessions.
The National Stock Exchange’s Nifty also tanked 128 points, or 2.1%, to 5,967 on selling pressures across counters.
“We have been looking at what is happening in the market. We think that Bernanake’s statement has been misunderstood or misinterpreted. He has clearly indicated that he will continue with quantitative easing in the foreseeable future at about $85 billion a month,” said Chidambaram.
Globally, Japan’s Nikkei share average plunged 7.3%, its biggest one-day percentage drop since March 2011 after a long rally. Other Asian and European markets also fell.
“There is an opportunity in this fall as the market here is ready for new highs,” said Vaibhav Agrawal, analyst at Angel Broking.