Markets post steepest fall in nearly 2 months

Sensex falls 340 pts to 28,119; Nifty down 100 pts

India's benchmark indices posted their largest single-day loss in nearly two months on Monday, led by a decline in technology shares after four promoters of Infosys pared their holdings in the company. The 30-share BSE Sensex fell 1.19 per cent, or 338.7 points, to end at 28,119.4, while the broad-based NSE Nifty ended down 1.17 per cent, or 100 points, at 8,438.25. Most global markets, too, traded weak on Monday after China's trade data missed expectations, raising concerns that the world's second-largest economy might be facing a severe slowdown.

The domestic markets could remain weak as India's current account deficit, released after market hours, worsened to $10.1 billion, or 2.1 per cent of the GDP, for the quarter ended September 2014.

"We saw major sell-off in the market because of lack of positive triggers. Also, the weakness in the global front impacted our markets, too," said Alex Mathews, head, research, Geojit BNP Paribas Financial Services. Mathews said with the Nifty breaching its key support level, there is a chance of it slipping another 50-100 points.

Shares of Infosys fell nearly five per cent, the most in six months, to Rs 1,968.6 apiece. The drop followed the share sale worth around Rs 6,300 crore by four promoters. Shares of bigger rival Tata Consultancy Services fell 2.5 per cent to Rs 2,513.7 apiece. Both stocks together accounted for nearly 150 points decline in the Sensex.

"The market has had a good run and valuations are high, so it's natural for some investors to book profits," said Chokkalingam G, managing director, Equinomics Research.

According to provisional figures, foreign institutional investors invested nearly Rs 5,000 crore and domestic institutions net bought shares worth Rs 1,000 crore on Monday. However, most of the investment was made in Infosys' large stake sale. Overseas investors pumped in some $16 billion into Indian stocks this year.

All sectoral indices, with the exception of consumer goods, ended with losses on Monday. Negative news flow from China hit shares of metal companies with Tata Steel losing two per cent, Hindalco Industries declining 2.5 per cent and Sesa Sterlite dropping 3.7 per cent. Banking shares led by HDFC Bank and State Bank of India also fell on profit-booking, following sharp gains last month. ITC and Coal India were the biggest gainers in the Sensex index.

The India VIX index, a barometer for market sentiment, soared 2.15 per cent to 12.2. Derivatives analysts expect the market to cool off in the coming sessions, following sharp 33 per cent gains this year.

According to Bloomberg, Sensex valuation has reached 16 times projected 12-month profits. The MSCI Emerging Markets Index trades at a multiple of 11.2 times. Analysts, however, believe the Indian market can continue to command a premium on improved economic prospects.