Mumbai: Indian equity market fell prey to falling industrial production growth, sliding rupee and rising European woes on the first day of trading week. The 30-share BSE Sensex dropped 365.23 points, to close at 16,501.74. The 50-share NSE Nifty has managed to hold the 4900 mark amid sell-off, though it lost 112.65 points, to close at 4,948.80.
Benchmarks cracked as July Industrial output data came in at dismal 3.3 per cent against 8.8 per cent in June and rupee fell to 47 to a dollar.
Rajesh Agarwal, Head of Research at Eastern Financiers said the market has already seen a cut. “I believe that we are in a safe territory unless it breaks 4900, so I will wait for that” he adds.
Peter Elston, Strategist at Aberdeen Asset Management Asia said, "It’s all about Europe right now and the main question related to whether or not the politicians have the resolve or the ability to rescue Greece and whether or not the contagion spreads beyond Greece. It is quite unclear right now whether the politicians do indeed have the ability to put some sort of rescue together."
While he urges investors to prepare for some more correction, he suggests the weakness in the Asian space is a great buy call.
European markets hit 26-month low on Greece worries. German DAX slipped below the 5,000 level for the first time since July 2009. France's CAC and Germany's DAX were down 4 per cent and 2.8 per cent, respectively. Britain's FTSE slipped 2 per cent, at the time of closing of Indian equities.
Juergen Stark, a German, unexpectedly quit the European Central Bank’s executive board last week; he opposed the ECB’s purchases of bonds from debt-laden countries. Even there were reports that Germany is planning to support certain banks if Greece defaults on its debt.
The Dow Jones futures slipped 178 points, which indicating fall in US markets on Monday. Asian markets like Hang Seng, Nikkei and Straits Times closed 2-4 per cent lower.
On the home turf, Indian rupee has touched 14-month low on Monday. It crossed the 47 per dollar mark on Monday, fell 1.3 per cent on weak European cues.
The Index of Industrial Production (IIP) growth for the month of July, 2011 came in at 3.3 per cent compared to 8.8 per cent in the previous month. The dismal number was mainly on account poor performance by capital goods, manufacturing and mining sectors, reflecting sluggishness in the economy.
"The number is definitely shocking though the consensus had a fixed percent plus. Over the last ten days, one could see that the confidence level among the business community is very low. It is far worse than even 2008 and 2009; it’s absolutely dismal," PN Vijay, portfolio manager, pnvijay.com said.
All sectoral indices closed in the red. Metal, technology, realty, banking and capital goods sectors saw major selling pressure; respective sectoral indices tanked 2-3 per cent.
SBI and ICICI Bank from the financial space fell 4 per cent. Infosys, TCS and Wipro from technology space tumbled 2.5-4 per cent.
Heavyweights Reliance Industries, L&T and Bharti Airtel were down 2-3.6 per cent. Tata Steel, Tata Motors, Tata Steel, Hindalco, JSPL, Sterlite Industries and Jaiprakash Associates crashed 4-5 per cent.
However, HUL and Ambuja Cements were on buyers' radar - both gained 4 per cent. Sun Pharma, Grasim and Cipla were other gainers.
The broader markets too followed the benchmarks - the BSE Midcap and Smallcap indices were down over 1.8 per cent.
About four shares dropped for every share rising on NSE. Total traded turnover was more than Rs 1.35 lakh crore.
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