Mumbai: The equity markets closed at their lowest level in last 20 months as continuing slide in global crude oil prices and data showing decline in India’s merchandise exports for the thirteenth consecutive month triggered broad based selling on the domestic bourses.
The small and mid-cap stocks were hammered badly on Monday with the BSE small-cap index plunging over four per cent and the BSE mid-cap index posting a loss of 2.72 per cent. This, according to market participants, is mainly on account of profit booking by retail and high networth investors.
On the other hand, the Sensex slumped 266.67 points or 1.09 per cent dragged down by a five per cent fall in Reliance Industries Ltd.
The Sensex closed the day at 24,188.37 while the 50-share Nifty ended the session at 7,351 down 86.80 points or 1.17 per cent.
Equities extended losses in most of Asia and Europe, with energy firms taking a hit from a fresh collapse in the cost of crude oil.
“Another 5-10 per cent correction in small and mid-cap stocks in the indian markets can’t be ruled out in the coming days as flow of funds from domestic fund houses have slowed down in the last few weeks,” pointed out Uaday Narayan Dubey, vice-president, institutional desk at R.K. Global.
According to him, the Nifty has immediate support at 7,300 and 7,200 levels and it is likely that traders who had created short positions would square off their positions at those levels. This could help the markets to stage a technical bounce-back.
“Global investors continue to be worried about the state of the global economic recovery. The negative macro economic data further dampened street sentiments. A 14.7 per cent fall in exports in the month of December 2015 coupled with a widening of the trade deficit by 27.1 per cent during the same period put the already spooked investors in a cautious mood,” noted Shreyash Devalkar, fund manager, equities, BNP Paribas Mutual Fund.
According to the provisional data released by the stock exchanges, foreign portfolio investors sold equities worth Rs 1,203.84 crore, pulling the rupee down against the US dollar for the third session.
The rupee on Monday dropped nine paise to 67.68 per dollar on sustained demand for the US currency from banks and importers amidst sharp fall in equities. The rupee has dropped by 83 paise or 1.24 per cent in three days.
