Mumbai: Shares fell 2.2% to their lowest close in nearly two months on Tuesday, as world stocks weakened on risk aversion due to worries over Ireland’s debt woes and talk of further monetary tightening in China.
The Sensex posted its biggest single-day percentage point fall in five and a half months, with financials leading the decline.
The BSE 30-share index Sensex declined 2.19%, or 444.55 points, to 19,865.14 points, its lowest close since 23 September. The index is up 13.7% so far in 2010.
Only one of its components closed in the green.
More than four shares declined for every share that advanced in the broader market. 474 million shares changed hands on the BSE, 13.4% higher than the 30-day average.
“Global cues are hurting today. It is a healthy correction, so long as it does not turn into a crash,” said Raamdeo Agrawal, co-founder and director of Motilal Oswal Financial Services.
Foreign funds, which have invested a net of $28.4 billion in Indian primary and secondary equities so far in 2010, turned net sellers on 12 November, their first outflow in November.
Their inflows showed signs of slowing down in the two sessions before that.
“We cannot say the trend has reversed as yet, going by what has happened in a few sessions,” Agrawal said.
Year end is also usually when profits are booked, he said. “Let’s give it more time before we conclude anything.”
Mahindra Satyam fell as much as nearly 14% to Rs72.60, its lowest since July 2009, a day after it posted a fiscal second-quarter profit that narrowed from the first quarter as wage hikes squeezed margins.
On Tuesday, BNP Paribas downgraded the company, formerly known as Satyam Computer Services, to “hold” from “buy.”
Mahindra Satyam closed 11.9% lower, while its parent Tech Mahindra shed 4.6%.
Bharti Airtel, was the only Sensex constituent that closed in the green, after Citigroup upgraded the top mobile operator to “buy” from hold” and named it as their top pick among Indian telecoms.
Bharti gained 1.2% to Rs313.10.
The banking sector index shed 2%, after a 2.4% rise on Monday.
Leading lenders State Bank of India, ICICI Bank and HDFC Bank dropped between 0.7% and 2.6%.
Metal producers slid on a drop in base metal prices in London and Shanghai as the potential for Chinese monetary policy tightening continued to drag prices.
Non-ferrous metals producer Sterlite Industries and aluminium producer Hindalco slid 5.4% and 5.2% each. Tata Steel, world’s seventh-largest producer of the alloy, declined 1.9%.
Energy giant Reliance Industries, which has the highest weight on the main index, slipped 2.2% on what dealers said was a lack of any near-term positive triggers.
The NSE 50-share index Nifty declined 2.2% to 5,988.709 points.
Elsewhere, the pan-European FTSEurofirst 300 was down 1% at 1023 GMT, while the MSCI’s measure of Asian markets other than Japan shed 0.6%.
Amongst regional peers, China’s Shanghai Composite Index and Hong Kong’s Hang Seng index closed nearly 4% and 1.4% lower, respectively.
Indian markets are closed on Wednesday for a public holiday.