Sensex and Nifty closed at 3-month low weighed down by rate-sensitive stocks while sustained fund outflows by foreign investors also weighed on investor sentiment.
Governor Raghuram Rajan said today that the central bank will examine how the country's banks are using provisions they were given to help tackle a crippling bad debt burden.
Moreover, investors’ sentiments are further dampened over a possible delay in the passage of the key GST Bill.
The S&P BSE Sensex was down 207.89 points at 25,044.43 after slipping below the psychological mark of 25,000. The Nifty50 was down 72.85 points at 7610.45 after breaching 7,600 in intra-day deals.
The S&P BSE Sensex and the Nifty50 hit their lowest levels in more than 13 weeks. Among broader markets, BSE Midcap and Smallcap indices were down 1.1-1.3%.
According to Ranak Merchant, Technical Analyst - Strategies from Sushil Financial Services, “After 6 consecutive days of a down-move, yesterday’s session had offered some respite to the markets rising towards 7,700 after defending 7,600 as a double bottom. The relief rally was short lived as global equity market weakness precipitated on our own markets as well. With a breach of 7,600 today in intra-day session, Nifty50 is trading just above its 52 week low and a monthly double bottom support of 7,537. The all eyes-on FOMC meet in the next week along-with IIP numbers to be declared later in the day today & inflation data next week, short term cues would be drawn from these events.”
She further adds, “As a 'Santa Claus' rally has gone missing this Christmas hopes are pinned on the 52-week low of 7,537 to offer support. Too soon to call it a bottom, 7,645-7,691 zone offers stern resistance and needs to be broken above in event the support of 7,537 holds. Medium to long term participants can take good advantage of the current fall to accumulate value stocks.”
Beside, the government will release the index of industrial production (IIP) data for the month of October and retail inflation numbers for the month of November after market hours today.
Indian industrial output is expected to rise 7.8% annually in October, its strongest pace in more than three years and much faster than the 3.6% seen in September. Retail inflation rate likely rose 5.4% in November as food prices climbed, a Reuters poll found.
In the overseas markets, Asian shares were set for sizable weekly losses, with equities faltering again on Friday as plunging crude oil prices and a tumble in China's Yuan to almost 4-1/2-year lows added to worries about receding global growth.
A supply glut in oil markets and cooling growth in China, the world's biggest commodities consumer, have pressured many asset markets ahead of a widely expected hike to US interest rates by the Federal Reserve next week.
MSCI's broadest index of Asia-Pacific shares outside Japan erased early modest gains and was down about 0.6%, facing a nearly 3% weekly loss.
Back home, rate-sensitive sectors like Banks, Auto and Realty reeled under maximum selling pressure, all down between 2%-3%.
Financial shares like ICICI Bank, SBI, Axis Bank, HDFC Bank and HDFC plunged between 1%-4%. The central bank announced a reduction in the share of government securities that banks have to mandatorily hold in their books in four equal phases starting from next fiscal year.
Auto shares also decelerated in today’s trade. M&M, Tata Motors, Maruti Suzuki, Eicher Motors and Ashok Leyland were down 1-4%. According to National Green Tribunal report, no new diesel vehicles will be registered in Delhi.
Capital goods majors L&T and BHEL lost between 1%-2% ahead of the IIP data due later today.
Tata Steel emerged as a star performer in a weak market. It gained over 3% after government of India initiated safeguard on imports of hot-rolled plates and sheets on steel. Further, according to media report, Tata Steel wants to sell UK plant.
Among other shares, Texmaco Rail surged over 5% after a four-company consortium won a contract for design and construction of signal and telecom works from Dedicated Freight Corridor Corporation of India.
Shares of SpiceJet dropped over 4% after the company has allegedly defaulted on payments towards the Airports Authority of India (AAI).
