Hit by a string of negative developments, the domestic markets came under renewed selling pressure with the financials and interest rate sensitive sectors succumbing to heavy selling pressure.
What weighed with the global investors appears to be the possible shutdown of the US Government because of the showdown between the Conservatives and Democrats over Obamacare.
With just about a week remaining to find an amicable solution, fears of government shutdown led to a sharp decline in the US markets on Friday and the impact is being felt among the Asian markets, including India.
The domestic market, apart from the US developments, also seems to have been hit by the growing concerns over interest rates remaining high, and as the market expiry is due this week.
What added to market nervousness further was the report by many brokerages that RBI may tighten the interest rates further with a view to tame the inflation.
The BSE Sensex closed at 19,900.96 points, down 1.79 per cent or 362.75 points from Friday's close. The Nifty index was down 2.04 per cent or 122.35 points at 5,889.75.
Banking and realty stocks fell the most by 4.41 per cent and 4.33 per cent, respectively followed by capital goods 3.28 per cent and PSU 2.56 per cent.
On the other hand, consumer durables, IT and TECk stocks remained investors' favourite and were up 2.36 per cent, 0.91 per cent and 0.43 per cent, respectively.
Sesa Goa, Hindalco, Wipro, Coal India and Dr Reddy's were the top five Sensex gainers, while the top five losers were SBI, ONGC, ICICI Bank, Maruti and L&T
'Brace for a further fall'
A HDFC Securities report cautioned that markets must brace for a further fall. The report said: "The markets have done an about turn. Brace for a further fall. The markets were hoping for a rate cut and they got a repo rate hike. The market’s swoon on Friday only partially discounts the development. Thursday’s post Fed rally has authored an expanding triangle in the Sensex. Expanding triangles have bearish connotations."
The report also drew attention to the fact that many of the US Fed's Open Market Committee members are expected to talk this week and this may trigger more confusion.
Support for Nifty
The report added that if the support of 5,798 breaks, the Nifty could retrace its steps to 5,688 and 5,552. It said that the attention of the markets is going to come back to FMCG and cement, but there should be no hurry.
Repo rate hike
While agreeing with the RBI decision to hike the repo rate, the report said that considering the increase in repo and reduction in marginal standing facility, banks are better off post this policy than what they were post the July intervention of RBI.
Hedging currency exposures
But high rates are here to stay and urged corporates to get used to it. It also drew attention to the need for hedging currency exposures by Indian corporates. Now that the rupee has come off the lows of 68.80, they should at least hedge now, the report said.
European stocks were unchanged as investors weighed the Germany election results.
Asian stocks were down as investors weighed the Fed stimulus outlook after a Federal Reserve policy maker said that a small taper may occur next month.
The negative sentiment was despite upbeat manufacturing data from China. Global banking giant HSBC today said its preliminary purchasing managers’ index for the manufacturing sector in China hit 51.2 in September, the highest since March when the index stood at 51.6.
The upbeat Chinese manufacturing data showed a promising pick-up in export orders, another sign of stabilisation in the world's second biggest economy.
What weighed with the global investors appears to be the possible shutdown of the US Government because of the showdown between the Conservatives and Democrats over Obamacare.
With just about a week remaining to find an amicable solution, fears of government shutdown led to a sharp decline in the US markets on Friday and the impact is being felt among the Asian markets, including India.
The domestic market, apart from the US developments, also seems to have been hit by the growing concerns over interest rates remaining high, and as the market expiry is due this week.
What added to market nervousness further was the report by many brokerages that RBI may tighten the interest rates further with a view to tame the inflation.
The BSE Sensex closed at 19,900.96 points, down 1.79 per cent or 362.75 points from Friday's close. The Nifty index was down 2.04 per cent or 122.35 points at 5,889.75.
Banking and realty stocks fell the most by 4.41 per cent and 4.33 per cent, respectively followed by capital goods 3.28 per cent and PSU 2.56 per cent.
On the other hand, consumer durables, IT and TECk stocks remained investors' favourite and were up 2.36 per cent, 0.91 per cent and 0.43 per cent, respectively.
Sesa Goa, Hindalco, Wipro, Coal India and Dr Reddy's were the top five Sensex gainers, while the top five losers were SBI, ONGC, ICICI Bank, Maruti and L&T
'Brace for a further fall'
A HDFC Securities report cautioned that markets must brace for a further fall. The report said: "The markets have done an about turn. Brace for a further fall. The markets were hoping for a rate cut and they got a repo rate hike. The market’s swoon on Friday only partially discounts the development. Thursday’s post Fed rally has authored an expanding triangle in the Sensex. Expanding triangles have bearish connotations."
The report also drew attention to the fact that many of the US Fed's Open Market Committee members are expected to talk this week and this may trigger more confusion.
Support for Nifty
The report added that if the support of 5,798 breaks, the Nifty could retrace its steps to 5,688 and 5,552. It said that the attention of the markets is going to come back to FMCG and cement, but there should be no hurry.
Repo rate hike
While agreeing with the RBI decision to hike the repo rate, the report said that considering the increase in repo and reduction in marginal standing facility, banks are better off post this policy than what they were post the July intervention of RBI.
Hedging currency exposures
But high rates are here to stay and urged corporates to get used to it. It also drew attention to the need for hedging currency exposures by Indian corporates. Now that the rupee has come off the lows of 68.80, they should at least hedge now, the report said.
European stocks were unchanged as investors weighed the Germany election results.
Asian stocks were down as investors weighed the Fed stimulus outlook after a Federal Reserve policy maker said that a small taper may occur next month.
The negative sentiment was despite upbeat manufacturing data from China. Global banking giant HSBC today said its preliminary purchasing managers’ index for the manufacturing sector in China hit 51.2 in September, the highest since March when the index stood at 51.6.
The upbeat Chinese manufacturing data showed a promising pick-up in export orders, another sign of stabilisation in the world's second biggest economy.
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