Registering its biggest single-day fall in one year, the stock market on Thursday plunged across the board after growing fiscal deficit concerns triggered a flight to safety among investors ahead of the Gujarat elections. The Sensex plummeted over 453 points to close at 33,149.35, while the broader Nifty finished below the key 10,300-mark.
On the other hand, after a three-day rally, the rupee dropped 15 paise to close at 64.46 a dollar on growing worries about the fiscal deficit and possible extension of crude oil production curbs by the Organization of the Petroleum Exporting Countries.
The Sensex, after a gap down opening at 33,542.50, continued its slide to touch a low of 33,108.72. It finally settled 453.41 points or 1.35 per cent lower at 33,149.35. This was its biggest single session fall since November 15 last year, when it had lost 514.19 points. The broader NSE Nifty, after cracking below the key 10,300-mark, touched a low of 10,211.25, before finally ending 134.75 points, or 1.30 per cent, down at 10,226.55, its biggest single day fall since September 27 this year, when it had declined by 135.75 points.
India’s fiscal deficit at the end of October hit 96.1 per cent of the budget estimate for 2017-18, mainly due to lower revenue realisation and rise in expenditure. In absolute terms, the fiscal deficit — the difference between expenditure and revenue — was Rs 5.25 lakh crore during April-October of 2017-18, according to data of the Controller General of Accounts (CGA). During the same period of 2016-17, the deficit stood at 79.3 per cent of the target.
Investors also kept their portfolios at a low ebb ahead of the second quarter GDP numbers. Squaring-up of positions following end of November series contracts in the derivatives segment and a weak trend in other Asian markets also weighed on the sentiment, brokers said.
Market capitalisation of listed companies declined by over Rs 1,00,000 crore in the selling spree. “The market slid and rupee depreciated as widened fiscal deficit concerns and expectation of extension in oil production cut from OPEC influenced investors to offload funds from the market. Today’s F&O expiry led volatility and selling in other Asian market hurt the sentiment, banks underperformed and metal lost the sheen,” said Vinod Nair, Head of Research, Geojit Financial Services.
Kotak Bank fell by 2.63 per cent, followed by SBI Bank 2.54 per cent. Other losers included Reliance Industries, Axis Bank, Wipro, Tata Steel, Lupin, M&M, HDFC, Sun Pharma, Cipla, Power Grid, ITC, Adani Ports, TCS, ONGC, Infosys and Maruti Suzuki. Dr Reddy’s and NTPC were the only gainers, rising up to 0.45 per cent. The broader markets were mixed, with the mid-cap index falling 0.55 per cent while small-cap rose 0.10 per cent. The BSE bank index declined 1.88 per cent, followed by energy (1.58 per cent), metal (1.10 per cent), PSU (1.09 per cent), auto (0.98 per cent), IT (0.87 per cent), power (0.83 per cent), oil & gas (0.81 per cent) and teck (0.70 per cent).
“With expectations running low ahead of Q2 GDP data release, stocks gave in under the pressure of derivatives expiry. The rupee also felt the pressure after steady rise for three straight sessions, while short covering never picked up momentum in stocks except in the realty sector. Any recovery in the GDP numbers revamped by the better consumer spending in the September quarter may rekindle positivity, but investors would also prefer clarity from Gujarat elections before strengthening their bets,” said a dealer.
According to Kunj Bansal, Executive Director & CIO, Centrum Wealth Management, one factor could be that it was expiry day today which could have kept investors in a wait-and-watch mode especially after upbeat US economic growth data overshadowed another North Korean missile test. “The month of December is laden with events on both local and international fronts which would determine the short term course of the market,” he said.