Mumbai: The cup of woes for markets spilled over as the Sensex Tuesday plunged over 514 points to end at nearly 6-month low of 26,305 and the Nifty crashed below 8,200 after fears of acute cash crunch arising out of demonetization played out amid capital outflows and surging US yields.
Expectations ran high that president-elect Donald Trump's policies would boost spending, which in a way could push up inflation. That rubbed off on the dollar, which rose.
Lackluster macroeconomic numbers and poor quarterly data by blue-chips only roiled the scene.
"As the demonetization drive entered the second week, the ripple effect of cash squeeze continued across sectors. Not all banks, which stand to gain from the deposit boom, could sustain last week's surge as the near term prospects... continued to be clouded by asset quality worries," said Anand James, chief market strategist, Geojit BNP Paribas Fin Services.
The Sensex opened lower at 26,809.61 and dropped further before ending down 514.19 points, or 1.92 per cent, at 26,304.63, a level last seen on May 25. It had lost 698.86 points on Friday on worries that US President-elect Donald Trump's impending reforms may spark further outflows from emerging markets (Ems).
The NSE Nifty fell sharply by 187.85 points, or 2.26 per cent, to 8,108.45, its lowest closing since June 27 when it settled at 8,094.70. Intra-day, it cracked below the 8,100-mark to hit a low of 8,093.20.
The currency market saw the big impact, with the rupee sliding 50 paise to 67.75 during the day.
Sentiment continued to be bogged down by the government's move last week to withdraw high-value notes, brokers said.
In a surprise move, the government had banned Rs 500 and Rs 1,000 currency notes in a bid to curb black money.
Persistent capital outflows from EMs amid all major Asian currencies declining against the US dollar since Trump's shock win in the US presidential election on November 8 was another factor behind the big plunge on the domestic bourses.
For the second month of decline, wholesale inflation eased to 3.39 per cent in October, data showed Tuesday.
Government data released Friday showed that industrial production grew a meager 0.7 per cent in September, mainly due to poor show by manufacturing and mining sectors coupled with decline in capital goods output.
Broader markets too remained under pressure, with the BSE small-cap index slumping 4.67 per cent and the mid-cap 3.91 per cent. Tata Motors was the biggest loser from the Sensex pack on the day -- sinking 9.88 per cent to Rs 457.25 after the company's standalone net loss widened to Rs 631 crore for the September quarter.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 1,493.27 crore last Friday, as per provisional data.
Other Asian markets finished lower as Japan's Nikkei fell 0.03 per cent while Shanghai Composite was down 0.11 per cent. European stocks, however, were a tad higher in their early deals as the US dollar stood at an 11-month high. Key indices in the UK, France and Germany rose by up to 0.88 per cent.
Back home, the broad market depicted weakness. There were more than four losers against every gainer on BSE. As many as 2,198 shares fell and 489 rose. A total of 143 shares remained unchanged.
The BSE Mid-Cap index provisionally fell 3.62 per cent. The BSE Small-Cap index provisionally fell 3.42 per cent. The decline in both these indices was higher than the Sensex's decline in percentage terms.
Out of the 30-share Sensex pack, 29 scrips ended lower while only one closed higher.
Mahindra & Mahindra (M&M) took the biggest hit as it plunged by 6.02 per cent to Rs 1,244 after the company said it will participate in the proposed rights issue of Mahindra Lifespace Developers.
It was followed by Adani Ports 5.86 per cent, ICICI Bank 5.32 pct, Hero Motoco 5.18 pct, Asian Paints 5.02 pct, Tata Motors 5.01 pct, HDFC 4.55 pct, Maruti 3.54 pct, Bajaj Auto 3.19 pct, ITC 3.11 pct, SBI 3.09 pct and Cipla 3.06 pct.
From the gainers pack only shares of Sun Pharmaceutical Industries Tuesday surged over 3.30 per cent on the bourses after the drug major posted a two-fold jump in second quarter net profit.
Among BSE sectoral and industry indices, Auto fell by 4.53 per cent followed by Consumer Durables 4.19 pct, Realty 4 pct, Telecom 3.40 pct, FMCG 3.24 pct, Finance 3.05 pct, Industrials 3.03 pct, Utilities 2.52 pct, Bankex 2.51 pct and Teck 2.48 pct.
The market breadth turned negative as 2,223 stocks ended lower, 460 closed higher while 147 ruled steady.
The total turnover on BSE amounted to Rs 3,461.19 crore, lower than turnover of Rs 3,737.42 crore registered during the previous trading session. Both the exchanges will be closed on Monday, November 14 on account of Gurunanak Jayanti.
(With agency inputs)