Mumbai: Disappointing earning results, coupled with negative global cues and a slump in crude oil prices dragged the Indian equity markets to their lowest levels in 2016 on Wednesday.
This led a barometer index of the Indian equity markets to plunge by 156 points during the mid-afternoon trade session. Selling frenzy led to both the bellwether indices of the Indian equity markets to trade at levels which were last seen during May 2014.
The bellwether indices even touched their new 52-week lows during the intra-day trade. Initially, both the indices opened on a weak note in sync with their Asian peers, especially the Japanese index. The selling pressure was accelerated by absence of any fresh positive trigger and below expected third quarter (Q3) results.
Investors were disappointed with poor earnings results from the banking sector and lower guidance from an information technology (IT) major. The decline of crude oil prices below $30 a barrel (one barrel is equal to 159 litres), as well as German IIP's (index of industrial production) fall dented sentiments.
Investors' doubts over the government's ability to perk up investments dragged markets' lower. In addition, frantic selling by foreign institutional investors (FIIs) dampened the equity markets. On Tuesday, they divested Rs.681 crore. Long-liquidation positions and disappointing macro-data for the third quarter growth figures also eroded investors confidence.
The barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) plunged by 156 points or 0.65 percent. Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) was trading deep in the red. It was down by 67 points or 0.91 percent at 7,231.45 points.
The NSE Nifty touched a new 52-week low at 7,177.75 points. The S&P BSE Sensex, which opened at 23,938.32 points, was trading at 23,864.71 points (2.30 p.m.) -- down 156.27 points or 0.65 percent from the previous day's close at 24,020.98 points.
During the intra-day trade, the Sensex touched a high of 23,938.32 points and a low of 23,636.72 points -- its new low in 52 weeks. The S&P BSE market breadth favoured the bears -- with 2,006 declines and only 523 advances.
"Profit bookings from the last few day's has finally matured into full-fledged panic selling today. The lower closing of Japanese markets, crude oil slump and disappointing results have all contributed to this panic selling," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
Nitasha Shankar, vice president for research with YES Securities, elaborated that Indian benchmark indices on a new 52-week lows suggested a prolonged bearish period for the markets. "Broader markets are underperforming the headline indices led by sustained selling in the high beta stocks," Shankar noted. "Metal and bank indices remain main culprits for this downward pressure. IT index is the lone gainer in trade so far. (IANS)