Sensex pares losses after plunging 700 points

Markets ended Tuesday's session on an extremely weak note with benchmark indices falling nearly 3% each after the rupee depreciated closer to its all time low level of 68.80. The investor sentiment was also shaken on reports that the US might strike Bashar Al Asad led regime in Syria for using chemical weapons against the opposition.

The BSE benchmark index -- Sensex crashed 651 points to close at 18,234 and the 50-share Nifty slumped 209 points to settle at 5,341.

The rupee slid a little closer on Tuesday to a record low struck against the dollar last week, as investors remained doubtful whether the government would act decisively to restore confidence in the economy.

The rupee had opened at 66.30 to a dollar and fell nearly 3% to 68.10 in the intra-day deals so far.

Investor sentiment was badly shaken on rising crude oil prices due to fears about a potential US military strike on Syria. Economists have called for an increase in subsidised fuel prices to help address concerns over a record high current account deficit and a fiscal deficit that is among the highest of all the major emerging market economies.

Meanwhile, the Asian markets closed on a positive note on the back of better than expected macro economic data from US and China. The hang Seng advanced 219 points to close at 22,394, Shanghai Composite ended higher by 25 points at 2,123, Nikkei jumped 405 points to close at 13,978 and the Taiwan Weighted gained 50 points to end at 8,088.

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Back home, the rupee and the BSE Sensex extended losses in the afternoon session on Tuesday after the Russian defence ministry was quoted by a news agency as saying it had detected two ballistic "objects" fired towards the eastern Mediterranean.

Russian radar detected two ballistic "objects" that were fired towards the eastern Mediterranean from the central part of the sea on Tuesday, state-run news agency RIA quoted the Defence Ministry as saying. The Defence Ministry declined immediate comment to Reuters.

Selling pressure was visible across the board. Banking, oil & gas and consumer durable stocks were amongst the worst hit in today's session.

The BSE banking index- Bankex slipped a whopping 5% or 527 points in the intra-day deals to settle at 9,871. Axis Bank was the top loser from the banking space. The stock crashed 9.3% to close at Rs 782. Yes Bank, Indusind Bank, Federal Bank, Bank of India, PNB, Canara Bank and Union Bank of India also fell 5.5-9% each.

BSE consumer durables index fell 4.6% to close at 5,451. Realty, FMCG, oil & gas, capital goods, power power, metal, healthcare and PSU indices plunged 1.5-4.5% each.

Index heavyweight Reliance Industries was the top loser on the Sensex. The stock fell 6% to Rs 830. ITC also fell 5.3% to Rs 302. Both these counters accounted for 25% decline on the Nifty.

Other prominent losers on the Sensex included ICICI Bank, Bharti Airtel, HDFC, Larsen & Toubro, HDFC Bank, Hindalco, HUL, Jindal Steel, Tata Power, Sun Pharma, Dr Reddy's Labs, Tata Steel, Cipla, State Bank of India and Sesa Goa fell 2.5-6% each. while, Coal India and Mahindra & Mahindra were among the notable gainers.

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Smart Moves

Among the individual stocks, Steel Strips Wheels Limited moved higher by 6% to Rs 123 after the company said it has recorded highest ever monthly sale of 971,000 wheels in August 2013 on back of good demand. The auto parts and equipment maker had sold 835,000 wheels in the same month year ago.

Radico Khaitan was locked in upper circuit of 5% at Rs 125 on NSE on reports that the company plans to sell a minority stake to Japanese liquor company Suntory Holdings.

Radico Khaitan, India's fourth largest liquor maker has begun preliminary talks to sell a minority stake to Japan's oldest liquor company Suntory Holdings, the Economic Times report suggests.

Hero MotoCorp dipped over 6% to Rs 1,893 after the stock turn ex-dividend today. The stock opened at Rs 1,984 and touched a low of Rs 1,879 in intra day deals on BSE. A total of 30,000 shares change hands on the counter on the BSE.

The board of directors of the world's largest manufacturer of two-wheelers at its meeting held on April 26, 2013, had recommended a dividend @ 3000% i.e. Rs 60 per equity share of Rs 2 each for the financial year 2012-13.

The broader markets also ended on a weak note. The BSE mid-cap index slipped nearly 2% or 100 points to close at 5,375 and the small-cap index slipped 1% or 50 points to end at 5,194.

The overall breadth was extremely negative as 1,478 stocks declined while 805 advanced.