Realty, metal, auto and PSU bank stocks were the biggest losers on the day.
“The measures by the Sebi on FPI regulations are good, but the market still awaits clarification on the tax proposals for the FPI’s made in Budget. Investors are also getting impatient with regards to the prospects of a stimulus package from the government and the comments made by some government officials have dimmed hopes. We continue to expect some weakness in the near term,” said Vivek Ranjan Misra, Head of Fundamental Research, Karvy Stock Broking.
Here are the key factors that weighed on Dalal Street:
Govt non-committal on stimulus
The lack of news on the economic stimulus front disappointed investors as they waited for more information from the government to arrest the economic slowdown.
Chief Economic Adviser (CEA) Krishnamurthy Subramanian on Thursday virtually ruled out a major stimulus package for the economy, saying “profit is private, losses are public” was not good economics.
The Indian benchmarks mirrored Asian and European peers as investors remained concerned over a looming global economic slowdown.
Asian shares closed lower as uncertainty over the outlook for both US interest rates and the chance of global fiscal stimulus sucked the life out of markets. MSCI‘s broadest index of Asia-Pacific shares outside Japan fell 0.5 per cent in light volumes.
European stocks were down in morning trade as sentiment was cooled after US Federal Reserve minutes showed that policymakers viewed last month’s cut in interest rates as a recalibration not the start of sustained monetary easing.
Economic slowdown hurting India Inc
The investor sentiment was further dampened after Care Ratings said that the ongoing economic slowdown has started hurting corporates as well, with companies reporting a sharp decline in both revenue and profit growth numbers in the June quarter.
India Inc’s net sales growth for the June quarter slid to 4.6 per cent as against 13.5 per cent for the same period last year, while the net profit growth moderated to 6.6 per cent as compared to last year’s 24.6 per cent.
Investors jittery ahead of Jackson Hole Symposium
Investors were also jittery ahead of Jackson Hole Symposium, scheduled to begin later in the day. Investors will be closely watching Federal Reserve Chair Jerome Powell comments, that may provide further cues on whether the central bank will go for further rate cuts to energise the economy.
Weakness in rupee
A sharp fall of 42 paise in the rupee against the US dollar made matters worse on Dalal Street. The rupee fell against the greenback amid foreign fund outflows. The domestic currency hit a low of 71.97 in today’s session.
Market at a glance
BSE Sensex tumbled 587.44 points or 1.59 per cent lower at 36,472.93 while NSE Nifty ended at 10,737.75, down 180.95 points or 1.67 per cent.
In the 30-pack Sensex, 4 stocks ended in the green and 26 in the red with YES Bank as the worst performer and Tech Mahindra best. Vedanta, Bajaj Finance, Tata Motors and SBI too joined YES Bank on the losers list, slipping up to 12 per cent.
TCS, HUL and HCL Tech were among other Sensex stocks that advanced.
The BSE Midcap index declined 1.35 per cent and the BSE Smallcap index ended 2.19 per cent lower.
BSE Realty index recorded losses of 6 per cent followed by Metal, Oil & Gas and Energy index.
In terms of index contribution, TCS, HUL, Tech Mahindra and HCL Tech were the top support while HDFC twins, RIL and ICICI Bank were the top drags on Sensex.
Sensex tanks 587 points, Nifty below 10,750: 5 factors that weighed on D-Street – Economic Times