The Indian stock market opened on a buoyant note on Wednesday with the Reserve Bank of India's decision to relax some rules that will help banks deal with the notional marked-to-market loss in their government bond portfolio triggering some hectic buying in the banking space.
The central bank also announced that it would repurchase government bonds worth around Rs 8000 crore on Friday, to facilitate some fund infusion in the banking system.
Along with bank stocks, several stocks from capital goods, realty and oil sectors too rallied sharply in morning trades. However, stocks retreated from their highs as the mood turned a bit cautious past noon, and then, plunged sharply in late afternoon trade following the rupee tumbling to a new all-time low of 64.44 against the U.S. dollar.
The BSE benchmark Sensex, which plunged to 17,807.19, a long way down from the day's high of 18,567.70, ended the session with a loss of 340.13 points or 1.86% at 17,905.91.
The Nifty index of the National Stock Exchange closed at 5302.55, recording a loss of 98.90 points or 1.83%. The index, which rose to 5504.10 in early trade, declined to 5268.45 in the final hour.
Metal, oil, FMCG, capital goods and healthcare stocks declined sharply. Power, automobile and information technology stocks too mostly closed notably lower. Bank stocks, which started off on a high note and managed to hold gains till around mid afternoon, wilted under pressure towards the end of the session and closed well off their highs. Select consumer durables stocks closed notably higher.
Ranbaxy Laboratories lost nearly 11%. Sesa Goa ended 9% down. ACC, Jaiprakash Associates, Bharti Airtel, Reliance Infrastructure, Reliance Industries, BPCL, Hindalco and Cairn India lost 4% - 7%.
Sun Pharmaceutical Industries, ITC, Dr Reddy's Laboratories, Tata Steel, NTPC, DLF, NMDC, IDFC, ONGC, Larsen & Toubro, Cipla, Coal India, HCL Technologies, Hero Motocorp, Bajaj Auto, Ultratech Cement, Lupin and Infosys ended lower by 1% - 4%.
IndusInd Bank ended stronger by 6.3%. HDFC Bank, Bank of Baroda, ICICI Bank, State Bank of India and Axis Bank closed with sharp to moderate gains.BHEL (4%), HDFC (2.7%) and Power Grid Corporation (1.1%) too ended on a firm note.
The market breadth was weak. Out of 2402 stocks traded on BSE, 1350 stocks declined. 915 stocks moved up and 137 stocks ended flat.