Stock markets plunge on global selloff

Key benchmark indices slumped on Monday as weakness in Asian and European stocks and a steep slide in US stocks on Friday last hit sentiment on the domestic bourses.

The BSE Sensex plunged 426.11 points or 2.02 per cent to settle at 20,707.45, the 50-unit CNX Nifty at NSE fell 130.90 points or 2.09 per cent to close at 6,135.85 points.
Sentiments in D-Street turned bearish amid a global contagion across asset class -- equities, currency and bonds. Financial turmoil in Argentina, fears of a sharper slowdown in China and expectations that the US Federal Reserve will continue to trim its bond-buying programme later this week have sparked a broad bout of risk aversion across the globe.

The rupee's weakness against the dollar also hit investor sentiment adversely.
However, the day's decline on the domestic bourses was broad based. The market breadth indicating the overall health of the market was weak with more than three losers for every gainer on BSE, while small and mid-cap indices saw an even sharper slide.

Bank stocks declined ahead of the Reserve Bank of India (RB)’s third Quarter Review of Monetary Policy for financial year 2013-14. Among private bank stocks, ICICI Bank (down 4.53 per cent), AXIS Bank (down 3.89 per cent), HDFC Bank (down 3.6 per cent) and Kotak Mahindra Bank (down 3.82 per cent) had to bear the brunt of the fall.

 Kotak Securities' Dipen Shah said, “Markets in India fell sharply largely due to the weakness in global markets and ahead of the RBI policy meeting tomorrow. Concerns over the contagion from emerging markets like China and Argentina kept sentiments subdued. Rupee also weakened in sympathy with currencies of various emerging markets and this also had a negative impact on the markets.

Going ahead, we expect RBI to hold rates in this meeting on the back of moderation in headline Consumer Price Index and Wholesale Price Index data. However, the core inflation will need to moderate, for the RBI to change its monetary stance.”

From broader markets, the BSE Mid-Cap index shed 2.82 per cent to 6,273.44 points, while the BSE Small-Cap index lost 2.64 per cent at 6,274.40 points. In the sense, both these indices underperformed the Sensex.