Sensex down 420 pts; highest percentage fall since Sep 2013

Benchmark share indices recorded their highest percentage fall since September 3, 2013, amid a sell off in emergingmarkets, with rate sensitive shares leading the decline ahead of the third quarter monetary policy review tomorrow.

The 30-share Sensex ended down 426 points or 2% at 20,707 and the 50-share Nifty closed 131 points or 2.1% lower at 6,136.

Reports suggest that the Reserve Bank of India, at its third quarter monetary policy review tomorrow, is likely to maintain status-quo for the second straight month because consumer price inflation continues to remain at elevated levels.

Emerging markets witnessed a sell-off amid worries that the US Federal Reserve would continue trimming its monetary stimulus measures while worries over liquidity crunch in China, the world's second largest economy also weighed on investor sentiment.

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Asian markets ended with steep losses today. Japan's benchmark index Nikkei ended down 2.5% with major exporters leading the fall after the local currency yen firmed up against the US dollar. China's Shanghai Composite ended down 1% on reports of liquidity crunch. Hang Seng ended down 2.1% while Straits Times ended down 1.2%.

European shares also turned weak after a flat opening tracking sharp losses in Asia. The CAC-40, DAX and FTSE-100 were down 0.2-1% each.

The BSE Realty Index was the top loser among the sectoral indices on the BSE down nearly 7% followed by Bankex, Metal, Power, Capital Goods, Oil and Gas indices were the top losers.

ICICI Bank, HDFC Bank, HDFC, Axis Bank and SBI ended down 1.7-4.5% each contributing the most to the Sensex decline.

In the auto segment, Tata Motors, Maruti Suzuki, M&M, Bajaj Auto and Hero MotoCorp ended down 0.5-6% each. Tata Motors ended down 6%. The stock remained subdued on news that Karl Slym, managing director, died after falling from a hotel room in Bangkok.

Capital goods major L&T extended ended down 2.6% while BHEL slipped 1.5%.

Index heavyweights Infosys and Reliance Industries also witnessed profit taking. RIL ended down 2.8% while Infosys slipped 0.7%.

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Meanwhile, Ranbaxy Labs continued to witness selling pressure and ended down 8%. Last week, the USFDA barred the import of active pharmaceutical ingredients (APIs) manufactured at the company’s facility in Toansa, Punjab. 

Hindustan Unilever ended up 1.7%, rebounding from intra-day lows, after the FMCG major surprised the street by reported better-than-expected third quarter earnings. Net profit stood at Rs 1,062 crore on net sales of Rs 7,038 crore. Analysts had estimated net profit at around Rs 930 crore.

Among other shares, Telecom shares ended lower after the Empowered Group of Ministers on telecom, at its meeting on spectrum fee issue, announced that the Subscriber Usage Charge for new spectrum will be a maximum of 5% of adjusted gross revenue. Bharti Airtel, Idea Cellular and Reliance Communications ended down 2-5% each.

Finolex Industries ended up 4.5% at Rs 157 in otherwise weak market after reporting more than double net profit at Rs 63.89 crore for the third quarter ended December 2013 (Q3) due to forex gain.

Glenmark Pharmaceuticals ended up 5% at Rs 535 after the company reported growth in its speciality and generic business despite a challenging business environment.

SKS Microfinance gained 1% to end at Rs 185 in an otherwise weak market on sharp rise in profitability for the third quarter ended December 2013.

Tata Elxsi ended up 4.3% at Rs 379 after reporting more-than-double consolidated net profit at Rs 21.56 crore for the quarter ended December 31, 2013 (Q3) on back of strong growth in operational income.

In the broader markets, the BSE Mid-cap and Small-cap indices ended down 2.6-2.8% each.

Market breadth continued ended weak with 1,952 losers and 643 gainers on the BSE.