Weak global cues, growth slowdown in China and further reduction of stimulus by US Fed Reserve rattled Indian investors on fears that outflows from local equities would intensify

Mumbai : Benchmark share indices slumped to an over two-month low, with the National Stock Exchange’s 50-share Nifty breaking its psychologically crucial support of 6000 intraday for the first time since Nov 22, dragged by losses in metals, real estate and automobile stocks.

Weak global cues, growth slowdown in China and further reduction in stimulus by US Federal Reserve rattled Indian investors who feared capital outflows from domestic equities.

Market participants are worried that sluggish growth in India and China would be further hit by the recent cut in US monetary stimulus.

The BSE 30-share barometer languished in the negative terrain throughout the day and settled at 20,209.26, a fall of 304.59 points or 1.48 per cent.

This was its weakest close since 20,194.40 on November 13, 2013. The BSE index has fallen for the sixth day in seven. The NSE 50-issue CNX Nifty tumbled by 87.70 points or 1.44 per cent to end at 6,001.80.

Jignesh Chaudhary, Head of Research, Veracity Broking Services said, “Indian markets carried forward their weak run from the previous week and started the first day of February on a sluggish note. The weakness in the market was primarily due to the slowdown in emerging market economies.”

Meanwhile, foreign institutional investors (FIIs) sold shares worth a net Rs 652.97 crore on last Friday, as per provisional data from the stock exchanges.

Though the selling was broad-based, IT, banking, FMCG, auto and metal counters bore the maximum brunt. Shares of mid and small-cap firms also encountered heavy profit-booking.  FIIs have net sold shares worth $12.78 mln so far this year.

Shares of pharma companies, which are considered as a safe bet, were among the few gainers with Lupin, Dr Reddy’s Laboratories, Sun Pharmaceutical and Cipla rising 0.5-4.5%.

Major losers were Hindalco, Tata Steel, BHEL, JP Associate, Bajaj Auto, Tata Motors, ONGC, Bank of Baroda, HDFC and Ranbaxy. Key gainers were Lupin, GAIL and Dr Reddy’s.

Investors seemed to ignore data that showed India’s manufacturing sector in January expanded at the strongest pace in the past 10 months. Fund managers said they were worried that the US Federal Reserve’s decision to further cut monetary stimulus by USD 10 billion per month will tighten capital inflows into India. Metal stocks suffered heavy losses on weak Chinese data.

However, the rupee gained for the first time in three days and closed up 12 paise to 62.56 against the dollar on fag-end sales of the US currency. After dropping 27 paise in the previous two sessions, the rupee’s strength was also linked to anticipation of spectrum auction inflows and a weak American currency overseas.

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