Markets record steepest fall in 16 months

India's benchmark share indices recorded their steepest fall since February 27, 2012 after comments by the US Fed that it would start pruning its monetary stimulus measures sooner-than-expected and weak China manufacturing data led to a sell off in global equities on Thursday.

Further, the rupee which slumped to an all-time low of Rs 59.95 also dampened investor sentiment as it would force the Reserve Bank of India to defer easing of key policy rates.

Asserting that Rupee is not in 'shambles', Finance Ministry today said the government, RBI and Sebi are alert to the situation and will take actions as warranted.

The 30-share Sensex ended at 18,719 down 526 points or 2.74% and the 50-share Nifty ended at 5,656 down by 166 points or 2.86%.

The Sensex and the Nifty touched an intra-day low of 18,687 levels and 5,647 mark, respectively.

On February 27, 2012, the Sensex had crashed 478 points or 2.66% to end at 17,446 and the Nifty had crashed 148 points or 2.8% at 5,281.

Bonds, shares and commodities fell sharply around the world on Thursday and the dollar rose after the US Federal Reserve explicitly signalled an end to easy money and data showed China's economy slowing down.

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The sell-off began after Fed chairman Ben Bernanke confirmed that US economic growth was strong enough to begin tapering back on its $85 billion in monthly asset purchases later this year.

In Europe the broad FTSEurofirst 300 index, which only last month hit a 5-1/2 year high, was down by 1.5 % in early trade, while the euro zone's blue-chip Euro STOXX 50 index fell 2 %.  

China's factory activity weakened to a nine-month low in June as demand faltered, a preliminary survey showed, heightening risks that a second quarter slowdown could be sharper than expected and raising the heat on the central bank to loosen policy.

The flash HSBC Purchasing Managers' Index fell to 48.3 in June from May's final reading of 49.2, drifting further away from the 50-point level demarcating expansion from contraction. It was the weakest level since September.

Japan's Nikkei share average fell on Thursday as weak China data further unsettled markets coming to grips with Federal Reserve Chairman Ben Bernanke's confirmation that the US central bank could trim its bond-buying programme later this year.

The benchmark Nikkei ended 1.7% lower at 13,014.58 points, retreating from a one-week high of 13,245.22 hit on Wednesday. It dipped below the 13,000 mark several times during the session.

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Back home, rate sensitive sectors were amongst the most hit on worries that the rising rupee would force the Reserve Bank of India to defer reduction in key policy rates going forward.

BSE Realty and metal indices slumped by almost 5%.

Sectors like Banks, Power, Oil & Gas, Capital Goods, PSU and Consumer Durables declined between 3-4%.

In fact, all the major BSE sectoral indices ended in deep red zone.

Shares of real estate and infrastructure companies plunged up to 10% after the rupee slumped to a record low today raising concerns that the rising rupee would force the Reserve Bank of India to defer reduction in key policy rate going forward.

Among the individual stocks, DLF, the real estate giant, tanked nearly 8% to Rs 175, its lowest value since August 2011, on BSE.

Shares of metal companies ended lower in the range of 3-11% on the Bombay Stock Exchange (BSE) due to weak manufacturing data from China.

China is the world's largest consumer of copper and aluminum.

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Among the individual stocks, Jindal Steel and Power and Tata Steel fell between 5-11%. Hindalco Industries and Sterlite Industries slumped over 5%.

Banking shares too were under pressure falling up to 8% after the Fed said that it would start curtailing its monetary stimulus measures if the economy continues to recover.

HDFC Bank, ICICI Bank, Yes Bank, Axis Bank, Dena Bank, Bank of India, Indian Overseas Bank, Union Bank of India and Bank of Baroda were down in the range of 3-8% on the Bombay Stock Exchange.

Index heavyweight RIL dropped by nearly 4%.

Other losers were BHEL, M&M, NTPC, Bharti Airtel and HDFC.

On the gaining side, Sun Pharma and Wipro gained by nearly 1%. Wipro gained in otherwise extremely weak market on reports that the company has won a $500 million (Rs 2,900 crore) outsourcing contract from Citigroup.

Meanwhile, BSE Midcap and Small indices slipped by nearly 2%. The markets bredath in BSE ended weak with 1,648 shares declining and 652 shares advancing.

SMART MOVERS

Tourism Finance Corporation of India rallied 12% to Rs 25 after the public sector financial institutional said that it is submitting application for securing a bank licence after its board approved the same.

S Mobility was locked in upper circuit of 5% at Rs 37.10 on NSE after its board approved buyback of the company's shares at maximum price of Rs 75 per share.

Fresenius Kabi Oncology has tanked 11% to Rs 108 on back of heavy volumes on the bourses.