It was a terrifying Tuesday on Dalal Street as the Nifty and Sensex erased almost three days of gains. The sell-off was so massive that benchmark indices, specially the BankNifty crashed 5.5% as the Indian currency once again breached the Rs68 per dollar mark. The rupee tumbled 3.6% to 68.80 per dollar, its biggest one-day fall in 18 years, bringing its 2013 losses to 20%.
Sentiment turned even more pessimistic after reports stated that Russian radar had detected two ballistic “objects” that were fired towards the eastern Mediterranean from the central part of the sea. However, the Russian embassy in Syria said there were no signs of a missile attack or explosions in Damascus.
If all this drama was not enough, reports stated that Standard & Poor’s chances of a credit ratings downgrade had increased for India. S&P has a “BBB-minus” rating on India with a “negative” outlook.
All the BSE sectoral indices ended in the red with the BSE Bankex index the top loser, down 5%, followed by BSE realty index down 4.4%, BSE FMCG index fell 4% and BSE oil & gas and capital goods index declined 3.6% each.
Even the mid-cap and the small-cap index fell by 2% and 1% respectively.
Finally, BSE Sensex closed at 18,234 down 651 points, while NSE Nifty closed at 5,341 down 209 points over the previous close.
Commenting on the market conditions, Amar Ambani, Head of Research at IIFL feels, “Clearly, the going is tough and to believe that the tough would get going is tougher than what the popular proverbial phrase emphatically suggests. Most companies in the Nifty are trading below their 2008 lows. Only a handful of sectors like FMCG, IT and Pharma have held their fort in the market and now even these are cracking due to indefensible valuations. I expect Nifty to drift lower to 5,000 levels, the basis being falling market multiples and earnings downgrades”.
Barring Lupin, Coal India and Cairn India all the other constituents in the Nifty index ended in the red. Stocks like Axis Bank, IndusInd Bank, DLF, Reliance Infra, PNB, Reliance Industries, Hero Motocorp and Ranbaxy were among the top losers.
The advance-decline ratio favoured the bears. On the BSE, 1478 stocks declined against 805 declining stocks, while 133 remained unchanged.
The India VIX hit its highest level since November 2011. It sky rocketed by 18% to close at 32.49.
The other Asian markets posted fourth straight day of gains. The Nikkei stock average was the region’s standout performer. It surged 3% to a three-week high.
While, the European shares opened higher. The FTSEurofirst 300 was up 0.2%, led by Britain’s FTSE 100 and Germany’s DAX and France’s CAC 40 both lost 0.2%.