245-points dip Sensex tumbles to 8-month low on drought fears

BSE Sensex today plunged by 245 points to 26,523.09 -- its lowest in nearly eight months -- on heavy selling in FMCG stocks amid prevailing drought fears and RBI's cautions stance on economic recovery.

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The 50-share NSE Nifty continued its slide for the sixth session and dipped below the psychological 8,100-mark by tumbling 70.55 points or 0.87 per cent to close at 8,044.15.

BSE benchmark Sensex on Monday plunged by 245 points to a nearly eight-month low of 26,523.09 as a host of worries ranging from US Fed rate hike, possibility of drought in the country and the Reserve Bank’s cautious stance on the economic recovery hit the sentiment. The rupee declined by 33 paise to end at a four-week low of 64.08 against the dollar on fresh dollar demand from banks and importers.

With Monday’s fall, the Sensex has lost 1,326 points since June 2, when the Reserve Bank cut repo rate by 25 bps, despite flagging concerns over the economic recovery. On the same day, the Met department had forecast monsoon to be deficient this year, triggering drought fears.

The 50-share NSE Nifty continued its slide for the sixth session and dipped below the psychological 8,100-mark by tumbling 70.55 points or 0.87 per cent to close at 8,044.15.

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Dealers said a sharp fall in equity market amid foreign fund outflows also affected the rupee value against the greenback. In the overseas market, dollar soared against most of its rivals on last Friday, hitting a 13-year high against the Japanese yen, after a strong jobs report indicated the US economy bounced back strongly in May, sparking a surge in treasury yields.

“The markets remained weak tracking the global cues. The concerns that US Federal Reserve may increase its interest rates on the back of positive US jobs data added pressure to the domestic market along with international market. Sustained FII selling and concerns of monsoon also negatively affected the sentiment,” said Alex Mathews, head of research at Geojit BNP Paribas Financial. The US posted a better-than-expected jobs data on Friday raising fears that the Federal Reserve was on track to raise interest rates this year.

Sectorally, the BSE consumer durables index suffered the most by falling 1.94 per cent, followed by metal (1.73 per cent), oil & gas (1.55 per cent), FMCG (1.52 per cent) and healthcare (1.17 per cent).

“Continued selling by foreign portfolio investors in Indian market and concern of shift of their interest from Indian markets to Chinese market created an alarming signal in the minds of investors,” said a trader.

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European stocks were also trading lower on Monday, as investors continued to focus on Greece where the government is struggling to reach a bailout deal with international lenders. Key indices in the UK, France and Germany were off in the range 0.02 per cent to 0.49 per cent.