The US Federal Reserve's monetary stimulus exit plan spooked markets today with S&P BSE Sensex plunging over 526 points, its biggest single-day fall in nearly two years, on massive offloading of shares by investors across the spectrum, amid the Indian rupee hitting a lifetime low of over 59.93 - virtually Rs 60. Jindal Steel, Tata Steel were the biggest losers.
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After Fed Chairman Ben Bernanke last night said US central bank will likely slow its bond-buying programme this year and end it in 2014, global markets went into a tizzy as USD 85 billion-a-month scheme offered easy money, said traders.
The Sensex opened with a sharp downside gap and continued to decline further amid rupee falling like a stone to hit record low of 59.93 against the dollar. Sensex kept falling even as finance ministry officials tried to sooth frayed nerves. It ended down 526.41 points, or 2.74 per cent, at over 2-month low of 18,719.29. The 526-point drop is the biggest since 704-point crash in September 2011.
28 out of 30 Sensex scrips closed down. With overall 1,650 stocks ending as losers, investor wealth worth Rs 1.57 lakh crore vanished in today's session.
"It was absolute bedlam in financial markets triggered by comments from the Federal Reserve overnight... there was nothing new in Fed statement but huge build up of leveraged positions led to the cascading fall across asset classes," said Amar Ambani, Head of Research, India Infoline.
Sustained outflows, weakness in European markets and tepid Chinese manufacturing activity also affected markets.
Market saw across-the-board sell-off as all 13 indices closed with losses of up to 5.1 per cent. Concerns over withdrawal of funds by FIIs and consequent impact on rupee as well as financing of CAD, hit sentiments further, said Dipen Shah, Head-PCG Research, Kotak Securities.
The National Stock Exchange index NSE Nifty dipped below 5,700 level by losing 166.35, or 2.86 per cent to close at 5,655.90. Also, SX40, the flagship index of MCX-SX, closed 308.22 points, or 2.70 per cent, down at 11,118.85.
Globally, benchmark indices in China, Hong Kong, Japan, Singapore, Taiwan and South Korea fell by 1.35-2.88 per cent. Euorpean markets were also trading lower in early trade as indices in France, Germany and the UK fell by 2 per cent.
The ultra-low borrowing rates the Fed