The benchmark Sensex ended lower for the sixth straight session, its longest losing streak since March 2015, amid fears that disruption in consumption following demonetisation will hurt GDP growth in the second half of the current fiscal.
Further, persistent selling by foreign funds coupled with caution ahead of expiry of November derivative contracts later this week also weighed on investor sentiment.
The S&P BSE Sensex ended down 385 points at 25,765 and the Nifty50 settled 145 points lower at 7,929. In the broader markets, the BSE Midcap and Smallcap indices ended down 3% each. Market breadth ended weak with 2216 losers and 417 gainers on the BSE.
"Fear of US Fed rate hike, continuous FII selling, weakening of Rupee in addition to concern about impact of demonetization on the economy dragged Nifty below 8000 mark to touched 5 month low of 7916. Sectors like Banks, Financials, Realty, Auto and Metals witnessed selling pressure, profit booking was seen in Mid and Small cap counters. Technology sector was in green on strong USD/INR which is at 4 months high," said Yogesh Mehta, VP- Equity Advisory, Motilal Oswal Securities.
Demonetisation impact on FY17 GDP
Several brokerages and credit rating agencies have cut their FY17 GDP forecast on the back of slower growth in the second half of the current fiscal because of demonetisation. Consumption demand is likely to be impacted in the second half of the current fiscal amid cash crunch, sluggish investments and loss of productivity as people continue to struggle to access cash taking time off from their jobs.
The government’s move to withdraw high denomination currency notes of Rs 500 and Rs 1,000 notes is seen as a major negative for the markets
and the economy in the near term.
Foreign Institutional Investors
Consumption shares, the favourites of overseas investors, witnessed selling pressure in today's trade. Data suggests that foreign institutional investors were net sellers in Indian equities worth $1.5 billion.
Emerging market currencies and equities have been battered ever since the surprising win by Donald Trump in the US presidential elections. Data suggests that India has been the fourth-worst performing emerging market globally and the worst-performing emerging market in Asia having corrected 7.5% in dollar terms.
Further, the Indian rupee continued to remain weak against the US dollar amid persistent selling by foreign investors over the past few trading sessions while appreciating US dollar on prospects of a rate hike by the US Federal Reserve also weighed on the Indian currency.
Financials were among the top losers with SBI leading the fall with a loss of nearly 6% followed by HDFC Bank, ICICI Bank, HDFC and Axis Bank.
Selling in state-owned bank shares dragged the Nifty PSU Bank index over 7% on the National Stock Exchange (NSE). Bank of Baroda and PNB dropped over 8% each.
In the consumer discretionary segment, Tata Motors, Maruti Suzuki and M&M ended down over 3% each. In the two-wheeler segment, Hero MotoCorp and Bajaj Auto ended down 0.6%-1.8% each.
IT exporters gained on the back of a weak rupee. Wipro and TCS ended 0.1%-1.1% higher.
Realty shares were the hardest hit post the demonetisation move by the government. Unitech, Oberoi Realty, DLF and Indiabulls Real Estate ended down over 5% each.
NBCC ended down over 4% after the company reported marginal growth in earnings. Net profit for the quarter increased 1.4% to Rs 69 crore compared to the same quarter last year.
Techno Electrical surged over 10% after the company reported over 31% year-on-year jump in standalone net profit at Rs 45 crore for the quarter ended September 30, 2016 against the same quarter last fiscal.
Panacea Biotec gained over 2% after the company announced that it has received an Establishment Inspection Report indicating the formal closure of the cGMP and the pre-approval inspection conducted by the USFDA.
Mawana Sugars jumped 12% after the company decided to sell one of its units at Titawi to Indian Potash for Rs 375 crore.
Major stock indices from Asia recovered from their intra-day lows to end higher. Japanese shares continued to rise amid a strengthening dollar against the yen. The Nikkei ended up 0.8% while the Shanghai Composite also gained 0.8%. Hang Seng ended flat with positive bias while Straits Times ended down 0.5%.
came off their early highs and were trading with marginal losses. Among the major stock indices in the continent the DAX, FTSE-100 and CAC-40 were down 0.2%-0.4% each.