A sell-off in global markets amid concerns about the global economy following the political unrest in Portugal and weak economic data from China, a disappointing report on India's serices sector activity and the sliding rupee, rendered the mood bearish and pushed Indian stocks down to a weak close on Wednesday.
For the second successive day, stocks reeled under sustained selling pressure, with investors in no mood to indulge in any big buying. Even stocks from information technology and healthcare sectors, which managed to find some support early on, wilted under pressure and ended well off the day's highs.
Realty and metal stocks were among the most prominent losers. Bank, capital goods, power, oil and PSU stocks too mostly ended sharply lower. Scores of stocks from midcap and smallcap segments tumbled and closed with notable losses.
The BSE benchmark Sensex, which plunged to 19,147.31, ended the session with a loss of 286.06 points or 1.47% at 19,177.76. The Nifty index of the National Stock Exchange settled at 5770.90, slightly off the day's low of 5760.40, recording a loss of 86.65 points or 1.48%.
According to a survey by Markit Economics, Indian services firms lost momentum in June as new business trickled in at the slowest pace in nearly two years, dashing hopes of a sustained pick-up in economic growth. The HSBC Markit Services Purchasing Managers' Index fell to 51.7 in June from May's three-month high of 53.6.
In the currency market, the rupee, which had bounced back smartly after tumbling to an all-time low of 60.76 last Wednesday, slipped below the 60 a dollar mark this morning due to heavy dollar demand, and contributed significantly to the market's weakness.
Amid worries about a disruption in supply due to escalating political crisis in Egypt, oil prices rose sharply in Asian trade this morning. New York's main contract, West Texas Intermediate light sweet crude for delivery in August, was up $ 2.20 at $ 101.80 a barrel in mid-morning trade, while Brent North Sea crude for August gained $ 1.11 to $ 105.11.
Tata Power, State Bank of India, Sterlite Industries and Tata Steel lost 4.5% - 5%. Hindalco, ONGC, BHEL, Bharti Airtel, Wipro, HDFC, Larsen & Toubro, Reliance Industries and Dr Reddy's Laboratories ended lower by 2% - 4%.
Jaiprakash Associates, down 8.3%, was the most prominent loser in the Nifty index. Bank of Baroda lost nearly 8%. IDFC lost around 6%. Punjab National Bank, Sesa Goa, DLF, BPCL, Reliance Infrastructure, Power Grid Corporation, NMDC, Ranbaxy Laboratories, Kotak Bank, ACC and Asian Paints lost 2% - 5%. Axis Bank and Cairn India also declined sharply.
Bucking the trend, Lupin (3.9%), Jindal Steel & Power (1.4%), Sun Pharmaceutical Industries (1.3%), Ambuja Cements (0.8%), ITC (0.6%) and HCL Technologies (0.5%) closed on a firm note. Grasim Industries, Infosys and Mahindra & Mahindra edged up marginally.
Hindustan Copper declined sharply following the government setting a floor price of Rs 70 for the offer for sale, a 3.78% discount to the stock's closing price on BSE on Tuesday, 2 July 2013. MCX Limited shares lost ground on reports the government has rejected the foreign direct investment proposal of the company.
The market breadth was very weak. Out of 2444 stocks traded on BSE, 1528 stocks declined. 787 stocks moved up and 129 stocks ended flat.