Sensex drops most in two weeks, tumbles 256 points; Rupee has first drop in 5 days, down 21 paise at 62.57

Mumbai: The benchmark Sensex fell 256 points, the most in more than two weeks, in a late sell-off that capped a choppy session on Wednesday as investors booked profits and global markets turned cautious.

Shares fell as the rupee declined against the dollar for the first time in five days.

ICICI Bank, HDFC Bank along with heavyweights Reliance Industries and Infosys dragged the index lower. Hindalco Industries, Bharti Airtel and Hero MotoCorp were among the 26 losers on the Sensex, even as Coal India emerged as the biggest gainer.

Bank, consumer durables and auto shares led 12 of the 13 BSE sectoral indices down. After opening lower, the S&P BSE Sensex plunged in the last hour of trade, dropping to a low of 20,579.94. The index recovered some ground and closed at 20,635.13, a loss of 255.69 points or 1.22 per cent. It was the biggest drop for the index since November 5.

In the previous three sessions, the Sensex had notched up gains of 696 points. The broader CNX Nifty index on the National Stock Exchange was down 80.45 points, or 1.3 per cent, at 6,122.90. The SX40 on the MCX Stock Exchange closed 155.5 points lower at 12,245.9.

"Once again, heavy selling pressure in last hour of trade brought Nifty to negative territory," said Nidhi Saraswat, Senior Research Analyst at Bonanza Portfolio Ltd. "Here too profit booking was prominent. Weaker global markets...also led to selling pressure."

Overseas stocks were mainly lower after the OECD cut its outlook for global growth. The Organisation for Economic Cooperation and Development on Tuesday forecast world growth at 2.7 percent this year and 3.6 percent for next.

Markets also awaited the release of the minutes of the Federal Reserve's Oct. 29-30 policy meeting for indications of when tapering of the stimulus programme may start. Fed chief Ben Bernanke on Tuesday reiterated the US central bank's commitment to an easy policy. The rupee fell by about 25 paise to 62.62/63 against the dollar.

Indices in Japan, Singapore, South Korea and Taiwan moved down while they gained in China and Hong Kong. In Europe, the markets were lower, with indices in France, Germany and the UK down. Foreign institutional investors bought a net Rs 1,014.61 crore of Indian shares on Tuesday, according to provisional data from the stock exchanges.

The biggest losers on the Sensex were ICICI Bank (-2.84 pc), Hindalco (-2.5 pc), Bharti Airtel (-2.44 pc), Hero MotoCorp (-2.07 pc) and Bajaj Auto (-1.97 pc). ICICI Bank, Reliance Industries, Infosys and HDFC Bank together contributed over 115 points to the Sensex fall.

The four gainers on the index were Coal India (1.83 pc), Sesa Sterlite (0.95 pc), Tata Power (0.76 pc) and Tata Steel (0.48 pc). The market breadth was negative 1,268 stocks declined and 1,247 advanced. Total turnover rose to Rs 2,136.90 crore from Rs 1,963.34 crore on Tuesday.

Next: Rupee has first drop in 5 days, down 21 paise at 62.57 vs USD

Rupee has first drop in 5 days, down 21 paise at 62.57 vs USD

Mumbai: The rupee fell against the dollar for the first time in five days, losing 21 paise to close at 62.57 on Wednesday, as local stocks declined.

Fresh dollar demand from importers, mainly oil refiners, and a firm US currency overseas outweighed support for the rupee from continued foreign fund inflows in domestic shares. At the interbank foreign exchange market, the rupee resumed higher at 62.25 a dollar from the previous close of 62.36 and touched a high of 62.24.

It dropped to a low of 62.68, in line with the fall in equities, before recovering some ground to settle at 62.57, a loss of 21 paise or 0.34 per cent. The rupee had appreciated by 135 paise, or 2.12 per cent, in the previous four sessions.

Overseas investors bought a net Rs 1,041.61 crore of shares on Tuesday, provisional data with the bourses showed.

"Today, rupee traded weak against the dollar, taking cues from local equities which closed negative," said Pramit Brahmbhatt, CEO of Alpari Financial Services (India). "We have seen dollar buying pressure from oil companies, which pulled the dollar below 62.50 levels."

The dollar index, an indicator of the US currency against six major global rivals, was up 0.12 per cent. The Federal Reserve is scheduled to release the minutes of its October meeting, which will be scrutinised for signs of when the stimulus programme would be tapered.

Fed chief Ben Bernanke on Tuesday said it may be some time before monetary policy returns to more normal settings. Data on US retail sales and housing are scheduled for release on Wednesday.

Forward dollar premiums recovered slightly on fresh payments from banks and corporates. The benchmark six-month forward dollar premium payable in April edged up to 244-1/2-245-1/2 paise from 243-1/2-245-1/2 paise and far-forward contracts maturing in October moved up to 485-487 paise from 482-1/2-484-1/2 paise previously.

The RBI fixed the reference rate for the dollar at 62.5580 and for the euro at 84.7104. The rupee fell to 100.99 against the pound from 100.21 on Tuesday and dipped to 84.63 per euro from 84.17. It declined to 62.66 per 100 Japanese yen from 62.45.