Market slides for seventh day, liquidity issues rear their head

Yellen, in a speech, said the US Federal Reserve should stick to gradual rate hikes despite the uncertainty about the inflation trajectory.

This was enough for foreign investors to hit the exit button, looking for instruments that yield better returns. The rupee took a hammering, sinking to over a six-month low of 65.75 against the dollar during the day.

The lingering Korean stand-off dealt a further blow after US President Donald Trump dialled up his threats saying America is "totally prepared" for a "military option" on North Korea, warning that would be "devastating". Updates of military action on the eastern border hastened the market's fall, which has been on a slippery slope ahead of the derivatives expiry on Thursday.

Clearly, it was downhill drive for the BSE benchmark right in the beginning, which settled lower by 439.95 points, or 1.39 per cent, at 31,159.81.

This is the weakest closing since June 30 when the gauge had settled at 30,921.61. It had lost 824 points in the previous six sessions.

Mood was downcast at the 50-share NSE Nifty too, which after regaining the key 9,900-mark at one stage closed down 135.75 points, or 1.38 per cent, at 9,735.75 – a level last seen on August 11 when it closed at 9,710.80.

"Market extended losses while the rupee sank to a 6-month low on continued outflow of foreign funds. Additionally, slowdown in GST tax collection dented sentiment and investors expected that the GST-led disruption is likely to extend and will hurt earnings for the next few quarters," said Vinod Nair, Head of Research, Geojit Financial Services Ltd.

Investors' wealth as measured by market capitalisation of BSE listed companies took a big knock of Rs 1,79,524 crore, which read Rs 1,30,55,056 crore. From the Sensex bloc, Adani Ports barrelled down 4.85 per cent, followed by SBI 2.89 per cent. The overall losses swelled because of weakness in heavyweight RIL, Dr Reddy's, Sun Pharma and ICICI Bank.

TCS emerged as the big gainer, up 0.62 per cent, while Coal India rose too.

Mid-cap and small-cap stocks moved in sync with the benchmarks and dropped by up to 2.10 per cent.

Stocks of Divi's Lab crashed 11.60 per cent to Rs 850.15 after the company said it has received six new observations from the US Food and Drug Administration (USFDA) after inspection of its Visakhapatnam unit.

Selling was maximum in the BSE realty index, down 2.66 per cent. Healthcare, capital goods and power stocks also kept low.

As has been the case so far, foreign portfolio investors (FPIs) stayed reluctant towards Indian shares, who net sold shares worth Rs 1,915.54 crore. Domestic institutional investors (DIIs) remained true to their form, picking up shares worth a net Rs 1,537.10 crore on Tuesday, according to provisional data.

Overseas, most Asian indices ended mixed. Participants waited for key events, including the unveiling of Trump's tax reforms and the release of Japanese economic data later in the week. European shares moved higher.

With the BSE benchmark index falling for the seventh day in a row on Wednesday, investors' wealth eroded by Rs 6.21 lakh crore during this period.

Investors' wealth as measured by market capitalisation (m-cap) of BSE listed companies slumped by Rs 6,21,409 to Rs 1,30,55,056 crore from Rs 1,36,76,465 crore as on September 18.

From the 30-index pack, Adani Ports slumped the most down 4.85 per cent, followed by SBI 2.89 per cent. TCS and Coal India were the only two companies to end with gains.

Mid-cap and small-cap stocks moved in sync with the benchmarks and dropped by up to 2.10 per cent.

Mumbai: The rupee continued to bear the brunt of panic dollar demand and plunged by a whopping 27 paise to end at 65.72 a dollar, its lowest level in six-and- a-half months, amid concerns over foreign capital outflows.

This is the lowest level for the home currency since March 14, when it had closed at 65.82 against the greenback.

The rupee has depreciated by sharp 3.04 per cent or 194 paise in last 14 trading sessions after revisiting a fresh one-month high of 63.78 on September 8.

A massive fall in local equities amid heightened global volatility took its toll on the currency market sentiment as global funds dumped Indian assets amid rising expectations for an imminent US interest rate hike.

US Fed chief Janet Yellen, in a speech, said the Federal Reserve should stick to gradual rate hikes despite the uncertainty about the inflation trajectory.

Staging a smart recovery, the rupee on Wednesday opened higher at 65.35 compared to Tuesday's closing level of 65.45 at the Interbank Foreign Exchange market on mild dollar selling by exporters.

However, it quickly reversed the trend in line with local stocks and retreated sharply to hit a fresh intra-day low of 65.7550 in late afternoon deals before ending at 65.72, showing a steep loss of 27 paise, or 0.41 per cent.

The RBI, meanwhile, fixed the reference rate for the dollar at 65.6947 and for the euro at 77.3686.

The rupee crash is seemingly inspired by reasons such as fears of massive capital outflows due to tepid macro-economic indicators and also concerns over weak corporate earnings.