Dashing hopes of a meaningful bounce back, as most analysts had predicted, the benchmark indices on Wednesday closed deep in the red, indicating the underlying weakness in the markets. The Sensex declined 213 points to 16,284.98 and the Nifty closed below the 4,900 levels, falling 60 points.
The markets opened lower and after an hour of choppy trade, a broad based selling pressure took over. The indices closed near the day's lowest point - a sign of further weakness.
Over the past few months, some big stocks have cracked, taking the markets lower. Reliance hit a two year low recently, Infosys has fallen over 30 per cent this year and today, SBI closed below key levels.
SBI closed below Rs. 2,000 levels for the first time since March, 2010. The stock declined 3.5 per cent. Commenting on SBI, Shardul Kulkarni of Angel Broking said the stock may test 1,900 levels, which is a good support. "The stock is very weak and there might be further weakness going forward. From a trading perspective, no bounce is expected," he added.
Auto and metal stocks saw steep decline - both sectors falling over 2 per cent. Tata Motors and Maruti closed with 3.5-4 per cent losses. Tata Steel declined over 4.5 per cent. JSPL ended with over 2 per cent losses.
Among IT stocks, TCS fell over 1.5 per cent. The stock had risen nearly 7 per cent on Tuesday. Infosys and Wipro closed with over 1 per cent losses. IT stocks have been under sustained pressure since US was downgraded by S&P. Vivek Mavani, VP (Equities) at Brics Securities said the sell-off in IT stocks have to be seen in the perspective of the wider markets. "Those stocks that have been FII heavy have fallen more...banking and technologies...are some examples," Mr Mavani said.
On the Sensex, only three stocks - HUL, Hindalco and HDFC- ended higher. Among the 27 other stocks, Coal India was the top loser, falling over 4.5 per cent. The company has been asked to close some mines in Jharkhand over environmental issues. The stock has been under selling pressure over workers' demands of raising wages.
Despite the fall, analysts were confident about the long term outlook. Prabhat Awasthi, MD & Head of Equities Research at Nomura India said valuations are attractive compared to long term averages, and over a 12 months period, investors would be better off if they bought at these levels.
Asian markets closed lower, after Moody's downgraded Japan's credit ratings, on falling output and exports. Hang Seng was down 2 per cent while South Korea's Kospi ended over 1 per cent lower. Japan’s Nikkei was down 1 per cent.
Over the last two sessions, European markets have provided strength to Indian equities. Today, European stocks were flat - at 1615 hours, France's CAC 40 was up half a per cent while Britain's FTSE was trading 0.11 per cent higher.
Overnight, the Dow rose 322 points, despite an earthquake that hit the East Coast. Fed's speech in Jackson Hole Friday is likely to be the next big trigger for the Wall Street.
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