The S&P BSE Sensex today crashed 769 points, the most in 4 years, as the rupee plunged to an all-time low amid fears the government may move to a capital- control regime to curb forex volatility and narrow CAD.
The rupee fell below the 62 level for the first time, plummeting to 62.03 against the dollar, after the Reserve Bank of India announced additional steps on Wednesday to restrict foreign-exchange outflows and gold imports.
The markets were also spooked by expectations that an improving US economy would lead to a flight of foreign capital from the domestic markets.
"The fear (among foreign investors) is that recent RBI measures may bring capital control measures back in a much bigger way. The markets crashed chiefly because of this," said Gautam Sinha Roy, VP-Equities, Motilal Oswal Securities.
The stock markets were jolted by weakness in global stocks after a steep fall on Wall Street yesterday as jobless claims declined to the lowest level since 2007, renewing concerns that the US Federal Reserve would start withdrawing its stimulus from as early as next month.
The 30-share Sensex opened lower at 19,297.11 from the previous close of 19,367.59. It dropped to a low of 18,559.65 and closed at 18598.18, a 769.41 point drop, or 3.97 per cent.
This was the largest point-wise fall since July 6, 2009, when the index plunged by 869.65 points. Investors were over Rs 2 lakh crore poorer as 6 out of 10 stocks fell on the BSE.
To curb dollar outflows, the RBI on August 14 announced stern measures, including curbs on Indian firms investing abroad and on outward remittances by resident Indians.
The RBI is not considering any capital control measures, it was clarified today. Top RBI sources blamed "unwarranted rumours" about controls on FII money to the market crash. The Finance Ministry today said RBI's steps on Wednesday cannot be called capital control measures and they had more to do with reducing stress on balance sheets.
All 13 sectoral indices closed lower, with consumer durable, realty, metal, banking, capital goods leading the fall. Hero MotoCorp rose 2.4 per cent, the sole Sensex gainer.
Similarly, the wide-based CNX Nifty of the NSE slumped by 234.45 points, or 4.08 per cent, to end at over 4-month low of 5,495.10. It also registered its largest fall in last four years while closed it closed at more than four-month low.
Also, SX40 index, the flagship index of MCX-SX, closed at 11,083.52, down 428.63 points or 3.72 per cent.
Asian stocks closed down today after some weak earnings and worries that the US Federal Reserve would soon pare its bond purchases. Key benchmark indices in China, Hong Kong, Singapore, South Korea and Japan were down by 0.10-0.75 per cent while the index from Taiwan ended up by 0.48 per cent.
European markets too were quoting low in early trade. The CAC was down by 0.10 per cent, the DAX by 0.25 per cent and the FTSE by 0.24 per cent. The Dow Jones Industrial Average and the Nasdaq Composite Index stumbled yesterday by 1.47 per cent and 1.72 per cent respectively on heavy sell-off.
Back home, Major losers from the Sensex pack were BHEL (10.70 pc), Sterlite Ind (6.65 pc), GAIL (India 6.49 pc), ONGC 6.06 (pc), Tata Power (5.91 pc), Tata Steel (5.88 pc), HDFC (5.81 pc), Jindal Steel (5.46 pc), L&T (5.19 pc), HDFC Bank (5.05 pc), ICICI Bank (5.02 pc) and Maruti Suzuki (4.84 pc).
Hindalco (4.80 pc), RIL (4.62 pc), Coal India (4.54 pc), ITC (4.33 pc), M&M (3.82 pc), SBI (3.32 pc), Bharti Airtel (3.31 pc), NTPC (3.26 pc), Bajaj Auto (3.26 pc), Infosys (3.10 pc), HUL (2.80 pc), TCS (2.75 pc) and Tata Motors (1.85 pc).
Among sectoral indices, S&P BSE CD fell 8.38 per cent, followed by S&P BSE-Realty (6.07 pc), S&P BSE-Metal (5.56 pc), S&P BSE-Bankex (5.55 pc), S&P SE-CG (4.98 pc), S&P BSE-Oil&Gas (4.79 pc), S&P BSE-PSU (4.67 pc) and S&P BSE Power (4.50 pc).
Led by Titan Industries which tumbled by 11.98 per cent, consumer durable counters were at the hardest hit today.
Banking shares too suffered heavy losses with some of the banks touching fresh 52-week lows during the trade.
Meanwhile, Foreign institutional investors injected Rs 247.96 crore on August 14 as per provisional data from the stock exchanges.
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