The BSE benchmark Sensex on Tuesday tumbled by 296 points to close at two-month low ahead of earnings season, as institutional investors pulled out of domestic markets after Germany reported its worst industrial output figures fall for five-and-a-half years.
The 30-share index resumed lower at 26,487.51 after long weekend holidays and dropped further to 26,250.24 before finishing at 26,271.97, disclosing a loss of 296.02 points or 1.11% from its last closing level.
The NSE 50-share Nifty also fell by 93.15 points or 1.17% to close at 7,852.40. "The selling pressure gained momentum after economic data showed that Germany's Industrial output figures posted its worst fall for five-and-a-half years. Following this, the European equities sold off. "Investors are awaiting comments from FOMC, slated to be released on Wednesday, regarding its take on the timing of interest rate hikes especially in the light of the strong jobs data," said Sanjeev Zarbade, Vice President- Private Client Group Research, Kotak Securities.
The provisional data released by the stock exchanges showed that foreign portfolio investors (FPIs) sold shares worth a net Rs 63.24 crore last Wednesday (October 1). Shares of metal, healthcare, capital goods, consumer durables, realty, banking and auto sectors declined sharply on heavy selling pressure. In the domestic market, 23 scrips out of the 30-share sensex pack ended lower while 7 others finished higher.
Major losers were Hindalco (4.35%), SSLT (4.32%), Cipla (3.67%), Dr Reddy's Lab (3.18%) and HDFC (3.11%). NTPC and Gail were major gainers.
Among the sectoral indices, metal fell by 2.65%, healthcare 1.85%, consumer goods 1.78% and consumer durables 1.72%. "So far the markets have moved more on anticipation of structural reforms & due to the ensuing capital flows. For a sustained rise, the adequate corporate earnings growth has to follow. The reforms hope should turn into reality too, else the disappointment risk could raise its head," said Devendra Nevgi, CEO of ZyFin Advisors.
European markets were trading lower after data showed that industrial output in Germany declined sharply in August. Key benchmark indices in France, Germany and UK fell by 0.75% to 1.09%. Asian stocks ended mixed as key indices in Hong Kong and South Korea firmed up by 0.23% to 0.46%, while indices in Japan, Singapore and Taiwan fell by 0.28% to 0.67%.
Jignesh Chaudhary, Head Of Research, Veracity Broking Services said, "After a long weekend on Tuesday market opened on a lower side and traded weak during the day taking cues from the concern over the growth in China which hammered the metal stocks and forced it to lead the decline. "Also investors fear that US Federal Reserve will raise interest rates next year for the first time since 2006, and concerns that the US stock market has gone too long without a correction and is surely due for the same sooner or later". Mid-cap and small-cap indices also fell by 0.90 and 0.79% on selling from retail investors.
The total market breadth remained negative as 1,767 stocks closed in the red while 1,111 finished in the green. Total turnover fell to Rs 2,673.53 crore from Rs 3,820.54 crore.