Stock markets on Thursday plunged further as lukewarm tax collection data, hawkish commentary from the US Federal Reserve and incessant foreign fund outflows prompted investors to rush to the exit door.
After swinging 626 points, the 30-share BSE Sensex ended 470.41 points, or 1.29 per cent, lower at 36,093.47. Similarly, the broader NSE Nifty plunged 135.85 points, or 1.25 per cent, to settle at 10,704.80. The previous closing low for Nifty was 10,604.35 on February 19, 2019. With this, the Sensex has fallen around 1,300 points this week with the drone attacks on Saudi Arabian oil installations pulling down Sensex by over 900 points on Monday and Tuesday.
The Centre’s direct tax mobilisation showed just 4.7 per cent growth till September 17, compared to a target of 17.5 per cent budgeted for the full year. Analysts said the tepid tax collection reflects deepening slump in demand and the overall growth.
Ajit Mishra, vice-president, research, Religare Broking, said, “Local cues dictated the market trend as the report on low tax collection and IMD’s report on floods damaging crops dented the sentiment. And the news of rate cut by the US Fed also failed to provide any solace as it was largely on the expected lines. All the sectoral indices traded under pressure and ended with deep cuts.”
“Markets are in bad shape and we feel the situation may deteriorate further in the absence of any major positive. The recent fall indicates prevailing uneasiness among the participants, who are hoping for some major announcements from the government to arrest the slowdown signals,” Mishra said.
“Lower tax collection figures spooked markets today as FIIs continued selling in key pivotals, dragging down indices. Exposure of many private sector banks towards commercial real estate further accentuated selling towards afternoon trade across these counters. Investors are getting jittery on PSU names as they keep losing market capitalisation rapidly,” said S Ranganathan, head of research at LKP Securities. Sectorally, BSE energy, oil and gas, bankex, metal, realty, auto, healthcare, teck and IT indices cracked up to 2 per cent. Telecom was the sole gainer, inching up 0.17 per cent. The broader BSE midcap and smallcap indices ended up to 1.48 per cent lower.
Although the US Federal Reserve slashed the policy rate by 25 basis points on Wednesday, it dimmed hopes for further rate cuts as it took a cautious approach to further reductions in borrowing costs. Yes Bank, the biggest loser in the Sensex pack, plunged 15.52 per cent after a Moody’s report said Altico default may be credit negative for banks given its significant exposure to the real estate sector. IndusInd Bank, ICICI Bank and Axis Bank too fell up to 3.59 per cent. Tata Steel, Maruti, SBI, RIL, Tech Mahindra, ONGC, Vedanta, Bajaj Finance, Hero MotoCorp and TCS fell up to 3.66 per cent.
Foreign portfolio investors sold shares worth a net of Rs 959.09 crore on Wednesday, while domestic institutional investors bought equities worth Rs 780.45 crore, provisional data showed. Brent crude futures gained $1.78 to $65.38 a barrel by 1219 GMT, while US West Texas Intermediate crude was up $1.28 at $59.39 a barrel. Meanwhile, the rupee fell 10 paise to close at 71.34 against the US dollar on Thursday as heavy selling in domestic equities, unabated foreign fund outflows and rising crude oil prices kept investors edgy.
Forex traders said investors also turned cautious after the US Federal Reserve dimmed hopes of further rate cuts. “Since the morning, rupee has been tracking the move in crude. Overnight drop in oil led rupee to appreciate. However, the escalating tensions in Middle East limited the gains in rupee,” said Rahul Gupta, currency research head, Emkay Global Financial Services.