Click to play videoMumbai: The BSE Sensex fell as much as 4.7 per cent on Thursday morning as it was caught up in global selling on fears of a deep US recession, with Reliance Industries and ICICI Bank leading the losses.
Top vehicle maker Tata Motors fell 7.7 per cent to 167.40 rupees after it said it was shutting down its commercial vehicle plant in eastern India for three days to avoid a build-up of inventory.
At 11:04 am, the 30-share BSE index was down 3.13 per cent, or 311.02 points, at 9,802.99, with 26 components falling.
The index had fallen 4.81 per cent on Wednesday to 10,120.01, snapping a five-day winning run after a surge that had lifted the market more than 40 per cent off a three-year low hit on October 27. It is down more than 51 per cent in 2008.
"It was expected. When you are in the grip of full-fledged bear market, you see sharp rallies. But that does not mean that things have turned around," said Daljeet Kohli, head of research at Emkay Global Financial.
"Markets work on both fundamentals and sentiments. Sentiments have improved after all the measures taken, but fundamental has not changed."
In the broader market, 1,336 losers outpaced 608 gainers on volume of 86.4 million shares.
Citigroup said corporate India had posted its lowest earnings growth in four years in the September quarter, as high interest rates and input costs hit demand, and Emakay's Kohli said the current quarter could be even worse as firms could not raise prices. "So the only way to increase topline is by increasing volume, which may not happen as demand is unlikely to pick up," he said.
"So your margins are already under pressure. When topline grows less, there is even more pressure on earnings," he added.
Reliance Industries, India's largest private sector firm and the heaviest stock in the main index, extended Wednesday's 12.8 per cent loss with 3.9 per cent fall even after it denied a report it had shut some polyester units due to lower demand.
Data showed foreign funds were net sellers of $23 million of stocks on Tuesday, in a market that had risen 2.8 per cent, after buying nearly $500 million worth shares in the previous two sessions.
Weekly inflation data is expected to show inflation in late October to have eased to around 10.5 per cent. While it remains in double-digits, the policy focus has shifted from reining in prices to shoring up growth and credit markets.
The 50-share NSE index was down 3.12 per cent at 2,900.55.
STOCKS ON THE MOVE
- Steel maker Tata Steel and aluminium maker Sterlite Industries both fell more than 8 per cent on concerns a global recession would lower demand for metals.
- Gujarat NRE Coke was down 5 per cent at 31.55 rupees. Its managing director said profitability would be hurt in short term by slowing demand.
TOP THREE BY VOLUME
- GVK Power on 9.2 million shares
- Suzlon Energy on 8.5 million shares
- IFCI Ltd on 5 million shares
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