Sensex plunges 400 pts, weak rupee weighs

Th Nifty slipped below 5,400 mark for the first time since September 12, 2012 and the Sensex plunged 400 points in noon trades

The Nifty slipped below 5,400 mark for the first time since September 12, 2012 and the Sensex plunged 400 points in noon trades on Monday amid selling pressure by institutional investors after the rupee which touched a fresh all-time low of Rs 62.65 against the dollar raising worries of a widening current account deficit and higher inflation.

At 1:14PM the 30-share Sensex slumped 400 points to 18,198 and the 50-share Nifty dropped   125 points to 5,383.

The rupee fell to yet another record low on Monday as the government's steps unveiled last week seemed inadequate to stall the currency's fall. The currency fell as far as 62.65 to the dollar, breaching the previous low of 62.03 hit on Friday.

Month-end dollar demand continued coupled with concerns on pull back of Fed's quantitative easing affected the rupee.

Currency dealers see the rupee nearing Rs 63 per dollar. They are also expecting the Reserve Bank of India (RBI) and the government to announce more steps to arrest the fall in the rupee.

Foreign Institutional Investors remained sellers in index futures last week and were net sellers in equities worth Rs 563 crore on Friday.

Asian stocks were trading mixed with Shanghai Composite and Nikkei were up 0.8% while Hang Seng and Straits Times were down 0.3-0.6% each.

European shares were also trading flat in early trades on Monday. The FTSE was marginally up while CAC and DAX were marginally down.

The BSE Auto index was the top loser down 3.8% followed by Bankex, Healthcare, FMCG, Capital Goods, Oil and Gas indices down 2-3.3% each.

Bajaj Auto was the top loser down 4.6% as the strike at its Pune unit has impacted production. Hero MotoCorp witnessed profit taking at higher levels and was down 5.4% after the stock had gained recently despite weakness in the markets. Other losers include, Mah&Mah, Tata Motors and Maruti Suzuki.

In the banking segment, ICICI Bank, HDFC Bank and SBI were down 2.3-3.9% each.

Among the index heavyweights ITC, Reliance Industries were down 1.7-1.8% each.

Other Sensex losers include, Hindustan Unilever, Sun Pharma, Bharti Airtel and HDFC among others.

However, shares of IT majors bucked the trend as a weakening rupee would aide in higher revenues. Infosys and TCS were up 0.5% each.

In the broader market, the BSE Mid-cap index was down 1.9% and the BSE Small-cap index was down 1.2%.

Market breadth weakened further with 1,340 losers and 647 gainers on the BSE.