Indian stocks ended a volatile session in the red on Monday on weak global cues and after the country clocked the slowest growth in industrial production in 11 months.
The benchmark Sensex of the Bombay Stock Exchange ended 170.33 points lower or 0.90 per cent to end the day at 18,737.27, while the broader Nifty of the National Stock Exchange closed at 5617.10 points, down by 0.81 per cent.
Fresh indications about further losses in the US sub-prime market, declining copper prices (an indicator industrial health) and higher crude prices, all point toward weakness in equities in the short term. “Recent sessions have seen downtick sessions on higher volumes and uptick sessions on poor volumes. These are indicators of smart money distributing at higher levels. If you have leveraged trades, start planning for a short-term decline. The markets seem to have turned for the near term,” said Vijay Bhambwani, CEO of BSPLindia.com
In September, India's industrial production grew at a 11-month slow rate as decade-high interest rates crimped consumer demand and a stronger currency made exports less competitive.
Production at factories, utilities and mines rose 6.4 per cent from a year earlier after gaining 10.7 per cent in August, the statistics office said in New Delhi. That was below all 15 estimates in a Bloomberg News survey, where the median forecast was an increase of 9.2 per cent.
The Sensex hit an intra-day low of 18,333, down by 574 points, and later recovered as heavyweights like L&T and Reliance staged a rebound, while FMCG stocks remained strong.
Top gainers in the benchmark index included ITC (up 5.30 per cent), NTPC (up 5.03 per cent), SBI (up 3.45 per cent) and HUL (up 2.85 per cent). The biggest loser on the index was ONGC (down 4.78 per cent), followed by Bharti Airtel (down by 4.29 per cent), HDFC Bank (down by 4.08 per cent) and Infosys (down by 3.60 per cent).
Global stocks hit 8-week lows while the yen raced to 18-month peaks versus the dollar on Monday as fears about credit-related losses at financial firms prompted investors to reduce bets on risky trades.
Fresh concerns about further losses linked to the fallout in the US sub-prime mortgage sector deepened over the weekend after Britain's Sunday Telegraph newspaper reported that HSBC would take a new $1 billion hit to results this week.
The credit crunch, which started in August, has worried consumers and threatened to weaken corporate profits and derail growth in the world's largest economy.