Market slump in late trades; Sensex down over 400 pts

Key benchmark indices continue to head south weighed down by financials, capital goods and IT shares

Markets slumped in late trades on Thursday amid selling pressure in heavyweights on fears that sooner-than-expected tapering by the US Fed will lead to lower inflows from foreign funds thereby reducing liquidity.

At 15:06 The 30-share Sensex was down 420 points at 20,210 and the 50-share Nifty was down 130 points at 5,992.


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(Update at 1430 hrs)
Investor sentiment was hit adversely after minutes from the Federal Reserve's last meeting signaled US stimulus may be reduced in coming months. The US central bank currently buys bonds worth $85-billion-a-month in a bid to hold interest rates low and encourage economic growth in the world's biggest economy.

 

At 1430 hrs, the Sensex was down 356 points at 20,279 and the Nifty gave off 109 points to trade at almost 6,014 levels.

 

"Markets facing stern resistance near 61.80% Fibonacci retracement resistance level of 6209 (Retracement of High of 03-11-13 and low of 13-11-13), coinciding with psychological benchmark level of 6200," says Ranak Merchant, Sushil Financial Services, Technical Analyst - Strategies. 

 

Downbeat China manufacturing activity added to gloom in most Asian stock markets on Thursday, while emerging market currencies faltered as the dollar charged ahead after the US Federal Reserve's latest minutes hinted at stimulus tapering.

 

MSCI's broadest index of Asia-Pacific shares outside Japan shed about 1.3% to its lowest point since middle of last week.

 

But Japan's Nikkei stock average bucked the region, rising 1.6% as the yen weakened against the dollar and on plans by a major government fund to invest more of its $2 trillion funds in riskier assets.

 

Back home, foreign institutional investors (FIIs) bought shares worth 800 million rupees on Wednesday compared with more than 10 billion rupees each on Monday and Tuesday.

 

The rupee falls to 62.88 versus its previous close of 62.57/58, after earlier hitting a session high of 62.97.

 

Losses track global gains in dollar after minutes from the U.S. Federal Reserve's October policy meeting suggested the central bank could soon move to taper monetary stimulus.

 

On the sectoral front, BSE Bankex, Consumer Durables, Realty and Capital Goods indices have plunged by nearly 2% each followed by counters like FMCG, TECk, IT, Metal, Oil & Gas, PSU, Power, Healthcare and Power, all declining by 1% each.

 

The main losers on the Sensex at this hour include HDFC, Infosys, Sesa Sterlite, Sun Pharma, ITC, L&T, ICICI Bank and ONGC, all dipping between 2-3%.

 

Metal shares have edged lower as a preliminary gauge showed that China's manufacturing activity decelerated this month. China is the world's largest consumer of copper and aluminum.

 

Among other shares, Amara Raja Batteries is trading higher by 3% at Rs 340, extending its previous day’s nearly 4% rally, in otherwise weak market, after brokerages raise target price.

 

Future Retail has dipped nearly 5% to Rs 75.55 after the National Stock Exchange (NSE) decided to remove the stock from future and options (F&O) contract from January 31, 2014 onwards.

 

The market breadth in BSE remains weak with 1,334 shares declining and 796 shares advancing.