A massive sell-off and persistent foreign fund outflows adversely impacted Dalal Street on Friday. Sensex plunged nearly 670 points to dip below the 27,000-level to finally close at 26,847.70. Nifty fell by 216.40 points, or 2.53 per cent, to close at 8,309.35.
A caution also prevailed in the markets ahead of September IIP data which was slated to be released later in the day.
When the IIP data released, it showed Industrial that production grew a meagre 0.7 per cent in September mainly due to poor show by manufacturing and mining sectors coupled with decline capital goods output.
As Sensex tanked by 2.43 per cent, all stocks of the 30 pack Sensex except Sun Pharma, traded in the negative zone. Not just that, all the sectoral indices led by consumer durables, realty and auto, were lower by up to 4.52 per cent.
Brokers said capital outflows were triggered by persistent selling by participants, tracking a weak trend in global markets on fears that US President-elect Donald Trump’s policies would be inflationary, leading to higher US interest rates and denting the appeal of emerging markets.
Disappointing earnings by state-run State Bank of India, recording 99.6 per cent dip in consolidated net profit too accelerated selling activity, brokers added.
Furthermore, depreciating rupee against the dollar also had a negative impact.
Rupee breached the 67-mark to end at over three-month low level of 67.25 against the US dollar on fears of capital outflows amid resurgent dollar overseas.
Rupee scripted its second biggest single-day crash this year as it ended with a steep loss of 62 paise to close at 67.25 per dollar — the weakest closing since July 26 when it had closed at 67.27.
However, the dollar strengthened against the major world currencies on speculation that the policies of US President-elect Donald Trump would be inflationary leading to rise in interest rates which could hit capital flows to emerging markets like India, a dealer said.
(With inputs from agencies)