Markets end at 2-month closing lows; Sensex below 26,000

RIL, HDFC twins, M&M, Infosys among the top losers for the day

Benchmark share indices ended near two-month closing lows on Thursday, amid weak European cues, with metal  shares declining the most on worries that global economic growth slowdown would hurt demand.

The 30-share Sensex ended lower by 1.3% or 350 points at 25,999 and the Nifty was off 1.5% or 116 points to close at 7,748.

India's volatility index, India VIX surged 12.6% to end at 16.43, the highest closing level in three months.

Foreign funds were net sellers in equities to the tune of Rs 695 crore on Tuesday.

Earlier in the day, the markets had opened lower but rebounded later defying weak Asian markets as exit polls suggested that the ruling Bharatiya Janata Party is set to emerge as the largest party in Maharashtra, thanks to intense campaigning by Prime Minister Narendra Modi. However, the market turned choppy later and witnessed a sell-off in late trades.

In the broader markets, the Mid and Smallcap indices ended down 2.5% each, underperforming the BSE benchmark index.

Global Markets

Global markets showed some signs of stabilization on Thursday after their most turbulent day in four years, but worries about world growth and the end of years of U.S. stimulus kept investors in a fraught mood.

European stocks bounced 1% as the region's bourses opened after Wednesday's 3.2% plunge, but fell back into the red soon after on concerns about a bond market sell-off in the debt of peripheral euro zone countries. CAC, FTSE and DAX were down 2-4% each.

Asian shares were off session lows but still nursed losses amid a sell-off in global equities on Thursday, as heightened concerns about world economic growth pressured U.S. Treasury yields and curtailed the dollar's recent rally.

MSCI's broadest index of Asia-Pacific shares outside Japan was down about 0.3% in late afternoon trade.

Shanghai shares bucked the downtrend and added 0.1% after Chinese bank lending data provided a regional bright spot. Lending beat expectations last month, a sign that demand for credit may be picking up, though a drop in China's foreign exchange reserves in the third quarter suggested ominous speculative money outflows.

Japan's Nikkei stock average tumbled 2.2% and touched a 4-1/2-month low, though it, too, pulled away from session lows as the dollar retook some ground lost to the yen.

Sectors & Stocks

All the sectoral indices closed in red with the FMCG being the least affected, down 0.04%.

Among the draggers were Auto, Consumer Durables, Capital Goods, Metal and Power indices which ended down 2-4%.

L&T, Crompton Greaves and BHEL closed down 1-8% dragging the Capital Goods index lower.

Metal stocks were the top losers on concerns of contraction in global demand.  Hindalco, Sesa Sterlite, Jindal Steel and Tata Steel slumped 3.5-5.5%.

Earlier in the day, Tata Steel was gained after it signed a memorandum of understanding with the Geneva-based Klesch group for the potential sale of its long products business in Europe and associated distribution activities. Analysts said the division accounted for 25 per cent of Tata Steel’s European operations.

However, defensive space like FMCG witnessed fresh buying. ITC gained 1.5% despite the recommendations by an expert committee to increase the space to be dedicated to statutory warnings on cigarette packs and impose ban on sale of loose cigarette sticks. HUL was flat with a negative bias.

From the IT space, TCS, Infosys and Wipro dropped 0.8-1.5%

Auto space was which mixed for most part of the trading session closed in red. Tata Motors, Maruti, Hero MotoCorp and M&M lost 1-4.5%.

All the banking stocks ended in red. Axis Bank, HDFC twins, SBI and ICICI Bank declined 1-2.5%.

In the Oil & Gas space, index heavyweight, Reliance Industries dropped 3% despite impressive Q2 results. Analysts have raised concerns about company diversification from core businesses of refining and petro to retail and telecom. ONGC was down 1.2% while GAIL edged higher by 0.7%.

Among reality stocks DLF has attracted investors due to cheaper valuation. The stock ended up 5% after nearly 29% slump yesterday.

The market breadth ended negative on BSE. 2,173 stocks declined while 756 stocks advanced.