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BSE Sensex today plunged by 406.08 points, its biggest drop in over two months, on heavy selling triggered by fresh fears that US Fed would begin tapering its economic stimulus earlier than expected. All the 30 constituents of Sensex today closed lower.
In step with local stocks, rupee plummeted to 62.97 versus the US dollar, raising the risk of higher import costs for the Indian economy.
Tracking overnight losses in US market, the Sensex opened the day lower at 20,579.26 and stayed in the negative terrain throughout. It touched a low of 20,189.23 intra-day, before finally closing at 20,229.05, down 406.08 points – its biggest loss since September 3 when it fell 651.53 points.
The Sensex had lost 256 points yesterday.
ITC, HDFC and RIL dragged it down while Sesa-Sterlite, Jindal Steel, Tata Power and Bhel were the biggest laggards.
In the broader market, all 13 BSE sectoral indices closed in red. Banking, capital goods and realty were the worst hit.
On similar lines, the broad-based NSE Nifty fell below 6,000 level to end lower by 123.85 points, or 2.02 per cent, at 5,999.05.
Also, SX40 of MCX Stock Exchange fell by 237.62 points to end at 12,008.28.
Yesterday's release of the minutes of Fed's October meet spooked global markets as it signalled tapering of the USD 85 billion monthly bond buying could happen "in coming months" if the economy improves as anticipated.
A survey pointing to a weaker-than-expected pace of growth in Chinese manufacturing activity also hit Asian shares, raising doubts over the recent economic recovery.
Foreign funds bought Indian stocks worth Rs 80.4 crore yesterday, compared with over Rs 1,014.6 crore buying on Tuesday.
Dipen Shah, Head of Private Client Group Research, Kotak Securities:
Markets continued to fall for the second successive day, largely on Fed taper concerns. The fall was broad based with almost all stocks in the Nifty ending in the red. Weak PMI data in China also impacted sentiments. However, we do note that, the comments from the current Chairman of the Fed as well as the in-coming Chairperson have been relatively dovish as compared to those of the other lawmakers in the last Fed policy meeting.
We reiterate that, introduction of more fiscal reforms and effective implementation of the reforms are the prerequisites