Sensex, Nifty At Over 1-Week Closing Lows As Financial Stocks Tumble

Domestic stock markets tumbled more than 2 per cent on Thursday amid a selloff across sectors led by financial stocks. The S&P BSE Sensex index hit 33,480.42 at the weakest level recorded during the session, shedding 766.63 points from its previous close. The broader NSE Nifty 50 benchmark declined to as low as 9,885.05 compared to its previous close of 10,116.15. A selloff in banking and financial services stocks deepened in late afternoon deals, while selling pressure also emerged in sectors such as automobiles, metals and pharmaceuticals.

The Sensex ended 708.68 points - or 2.07 per cent - lower at 33,538.37, and the Nifty settled at 9,902.00, down 214.15 points - or 2.12 per cent - from its previous close. Both benchmark indices logged their worst closing levels since June 1.

The markets extended losses after the Supreme Court extended a hearing on telecom companies' outstanding dues related to AGR or adjusted gross revenue, without providing any relief. The top court asked telecom operators to file replies on a roadmap for payment.

“Negative global cues and postponement of the decision on the AGR case sent the market tumbling," said Shrikant Chouhan, executive vice president-equity technical research at Kotak Securities.

Analysts awaited macroeconomic data due this week for more clarity on monetary policy going forward.

Official data on consumer inflation will be released at 5:30 pm on Friday. Consumer inflation - or the rate of increase in retail prices determined by the Consumer Price Index (CPI) - is likely to have moderated to a six-month low of 5.50 per cent in May, according to a poll of 35 economists by news agency Reuters.

Equities in other Asian markets eased after a downbeat economic outlook from the Federal Reserve stoked speculation the US central bank would have to add to already historic levels of stimulus to safeguard recovery.

The Federal Reserve hinted at years of extraordinary support for an economy facing a torturous slog back from the coronavirus pandemic, with policymakers projecting the economy to shrink 6.5 per cent in 2020 and the unemployment rate to be 9.3 per cent at the end of the year.

While MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.40 per cent, following 10 sessions of gain, Japan's Nikkei 225 benchmark declined 2.82 per cent. China's Shanghai Composite, Hong Kong's Hang Seng and South Korea's KOSPI indices dropped 0.78 per cent, 2.27 per cent and 0.86 per cent respectively.

The E-Mini S&P 500 futures were last seen trading 1.93 per cent lower, indicating a negative start for the US markets on Thursday.

"The US and Asian markets plunged mainly due to the Fed signaling that the path to economic recovery will be long even as worries over the second wave of coronavirus infections grew," said Mr Chouhan.  

European markets started the day with heavy losses. The United Kingdom's FTSE benchmark was last seen trading 2.44 per cent lower, while France's CAC and Germany's DAX barometers were down 2.73 per cent and 2.63 per cent respectively.