Markets crash: Sensex, Nifty hit 20-month low

India's benchmark indices fell sharply falling way below their 52-week lows admidst a selloff in markets across Asia. A slowdown in the US economic growth led to investors paring down exposure to equities. In the Indian context, a falling rupee has added to the pressure on profitability of companies.

At 1221 hours, the Sensex was down 450 points to 15,614 while the broader Nifty index declined 131 points to 4,680. The Nifty has fallen below the 4,700 mark for the first time in 20 months. The Nifty last traded below 4,700 levels on 8 February, 2010. Benchmark indices in Hong Kong, Korea and Taiwan also traded two to three per cent lower. 

"The Nifty support level was 4,720. Once it was taken off the markets witnessed a cascading effect. The Nifty can fall 200 points now as supply will overpower demand," Kiran Jadhav of Precision Technicals said.

Banking stocks saw the steepest cuts, falling 3.5 per cent. HDFC Bank plunged 6 per cent. ICICI Bank was down 4 per cent.

Energy and IT stocks also slumped nearly 3 per cent. Most other sectoral indices were trading with over 2 per cent cut.

All stocks were down on the Sensex. Jaiprakash Associates, Bharti, Reliance and JSPL were trading with over 4 per cent cuts.

Only two stocks were trading higher on the Nifty. RCom was up after three officials of Reliance ADAG were granted bail by the Supreme Court earlier today. GAIL was also trading higher.

The market breadth had collapsed with an overwhelming 92 per cent stocks falling on the broader BSE 500 points.

Among large cap stocks government oil major ONGC, India's largest PSU bank SBI, private sector lender ICICI Bank and Axis Bank made new lows today.

Markets make some recovery on flat European stocks

Indian markets have seen some recovery after European stocks opened flat today. At 1425 hours, the Sensex was down 365 points to 15,700, recovering over 200 points from the day's low of 15,478. The Nifty traded with 106 points cut and was trading above the 4,700 mark.

Earlier, markets had fallen to near two year lows. The Sensex was down nearly 600 points while the Nifty had given up over 160 points. The Sensex and Nifty were among the worst performers among all Asian indices, falling nearly 3 per cent.

Analysts attributed the panic selloff to liquidation by foreign funds. Fears of global slowdown also led to selling pressure across global equities. Asian markets closed sharply lower with markets in Taiwan and South Korea falling more that Indian equities.

"The underlying retail investors in the western world are pulling out money from the risk assets, whether in the emerging markets or developed markets... FII fund managers have to find cash for which they have to sell," Saurav Mukherjea of Ambit Capital said.

"The currency factor is clearly not helping. It has really hurt investor returns. What is causing the sellout is that they (FIIs) don't see any reason for the rupee to pullback to 45," he added. The rupee has fallen nearly 14 per cent in the last quarter alone. However, the currency was trading higher today, possibly on the back of intervention by the central bank.

Consumer durables were the only group of stocks trading higher on the Bombay Stock Exchange. These stocks had seen a sharp selloff yesterday. Banking, energy and IT stocks were the worst hit, falling over 2 per cent. Realty stock saw relative outperformance, falling 1 per cent lower.

On the Sensex, only NTPC was trading with marginal gains. Bharti (down 5 per cent) was the worst performer among the 29 other stocks that were trading lower. On the Nifty, two of the 50 stocks were trading higher. Reliance Communications gained 1.5 per cent after the Supreme Court granted bail to three executives of ADAG group in the 2G case.

The market breadth had improved marginally but an overwhelming 87 per cent stocks were still trading lower on the broader BSE 500 index.