Sensex skids 316 points on oil

Sensex and Nifty end at near two-week lows on Wednesday and only slightly above their 20-month lows

Slide in oil prices has triggered a fresh bout of selling in stocks. Indian markets dropped over a per cent on Wednesday, mirroring other global markets, after oil prices extended this week's fall to six per cent before recovering some losses. The plunge in oil prices raised fresh worries that the global economy is weakening, prompting investors to move to safe assets such as gold and developed-world bonds.

Sensex and Nifty ended at near two-week lows on Wednesday and only slightly above their 20-month lows.

Declining for a third straight day, the Sensex lost 316 points, or 1.3 per cent to 24,223, while the 50-share Nifty fell 94 points, or 1.26 per cent to 7,362. The Sensex closed at its lowest level since January 21, when it closed at a 20-month low of 23,962.

Foreign investors sold shares worth over Rs 350 crore on Wednesday, while domestic institutions were net sellers of Rs 145 crore, provisional data showed.

Sell-off by foreign investors, triggered by a drop in oil prices, dashed hopes of any pre-Budget rally in the Indian markets.

"A pre-Budget rally appears unlikely as we do not expect de-coupling of Indian stocks from global markets. 'Best case scenario' for Indian stocks is an environment of stability (reflecting diminishing tail risks) in which India will outperform as relative fundamentals remain attractive," said Ravi Sundar Muthukrishnan, senior vice-president and co-head, research, ICICI Securities.

Japan's Nikkei fell 3.3 per cent on Wednesday, erasing all gains made after Japanese central bank announced negative interest rates. Hong Kong's Hang Seng fell 2.3 per cent and China's CSI 300 fell nearly 0.5 per cent. The declines spread to Europe, with the region's FTSEurofirst 300 extending its two-day declines to over three per cent.

Brent crude oil futures were hovering around $32.5 per barrel on Wednesday. Concerns over China-led global slowdown has seen oil prices plunge 70 per cent since August 2014.

"The continuing volatility in crude oil prices dragged benchmark indices for the third day. Rising uncertainty in global market is influencing investors to pull out funds from emerging markets," said Vinod Nair, head, fundamental research, Geojit BNP Paribas Financial Services.

On Wednesday, there were four declining stocks for every one stock advancing, indicating a broad-based selling in the market. Among the 30 components of Sensex, only three were gainers. Four stocks managed to gain on the 50-share Nifty.

Among blue-chip stocks, the major losers included Bhel (Bharat Heavy Electricals Ltd), which fell five per cent, followed by NTPC and Tata Steel, four and three per cent, respectively. Index heavyweights Reliance Industries, State Bank of India, and ICICI Bank, fell over two per cent each.

Sensex is down seven per cent so far this year, on the back of foreign investors selling nearly $1.7 billion. The index is down 19 per cent from its all-time high touched in January last year.