Sensex Plunges Over 500 Points; Hindalco Slumps 6%

BSE Sensex and Nifty fell over 2 per cent in afternoon trade, tracking big losses in European markets. Banking, metal and capital goods stocks were among the major losers. A weak rupee also hurt the sentiment. The Sensex fell as much as 570 points while Nifty slumped below 7,800.

Here are top 10 developments:

1) Analysts attributed the selloff in Indian markets to weak global cues and selling pressure due to the forthcoming derivative expiry. Domestic markets are likely to remain volatile ahead of the expiry of September derivative contracts on Thursday, they say.

2) The selloff in Indian markets accelerated after European markets plunged today. Major European markets were down over 2 per cent while Dow Futures were down over 1 per cent, indicating a lower opening for the Wall Street later in the day.

3) If the Nifty breaches the 7,740, it could retest the August lows of 7,500 levels, said Anil Manghnani of Modern Shares and Stock Brokers.

4) Traders are also likely to remain cautious because this is a truncated week, analysts say. Markets will be closed on Friday due to a holiday.

5) Also, keeping traders cautious, the Reserve Bank will announce its monetary policy on September 29. A 25-basis point rate cut is already factored in, say analysts; the RBI could surprise with a 50-basis point cut, they say.

6) Traders are closely tracking the rupee. The rupee was trading lower at 65.82/dollar against its Monday’s close of 65.72/dollar.

7) The index for banking stocks, Bank Nifty, fell 3 per cent. Yes Bank and PNB fell over 3 per cent while Kotak Mahindra Bank and SBI were down nearly 2 per cent.

8) Metal and capital goods stocks were also under pressure today with Hindalco and Vedanta slumping over 6 per cent while L&T fell over 3 per cent.

9) Traders will be closely tracking foreign funds, which bought Indian equities (net) of Rs 154.87 crore on Monday. Analysts say the sustainability of the fund flow needs to be watched as foreign funds have sold Indian equities worth nearly Rs 3,000 crore this month.

10) Foreign funds had sold a record Rs 16,877 crore (net) worth of domestic stocks in August, leading to the selloff in Indian markets last month.