Nifty below 4850...Falls 12% in August F&O series

The Indian markets declined for a second straight trading session on Thursday amid a late sell-off in IT, Metals, Banking and Telecom stocks. On the other hand, Pharma, Realty and FMCG stocks bucked the negative trend. The key Indian equity benchmarks took an ugly turn down in late trade, with the BSE Sensex and the NSE Nifty losing over 1% each. The Nifty in fact broke below the 4850 mark.

Finally, the BSE Sensex ended at 16,146 losing 139 points. It had earlier touched a day's high of 16,373 and a day's low of 16,104. It opened at 16,338. The NSE Nifty closed at 4,839 losing 49 points.

The Indian market were very volatile today, with the key stock indices swinging between gains and losses throughout the session. After recovering from the intraday lows and returning to the positive territory in early afternoon, the Sensex and the Nifty turned red again in mid-afternoon trade.

The Indian stock indices opened higher but could not sustain the early morning's gains and hit the day's low in late morning trade before turning positive in the afternoon.

The Indian benchmark indices have underperformed the world equity markets this week. The Nifty saw a sell off despite gains in the US and Asian markets. Even a smart start to European markets was unable to lift the sentiment.

Coming back to domestic issues, inflation continues to remain a hurdle, as the country’s weekly inflation rose for second week. Annual inflation in the Food Articles group rose to 9.80% in the week ended August 13, from 9.03% in the previous week. Inflation in the Primary Articles group climbed to 12.40% in the week under review, from 11.64% in the week ended August 6.

The Sensex and Nifty tumbled 12% in the August series, their worst performance since October 2008. The CNX Mid-Cap index and the BSE Small-Cap index lost 11% and 15%, respectively as well.

Hero MotoCorp, Bajaj Auto and BPCL were the notable gainers amid all the gloom and doom. On the other hand, ADAG shares were among the top losers in the August series.

The NSE CNX IT index fell over 19% followed by the BSE Metal index, losing 17% while the Bank Nifty saw erosion of 15.6%.

"The undertone is still cautious amid persistent selling by the FIIs and fear of another rate hike next month. Q1 FY12 GDP data will be released next week. Already, a spate of brokerages and private think tanks have scaled down the FY12 GDP growth projections. The Government too has lowered its FY12 GDP forecast to around 8%, from 9% earlier. Global markets are keen to hear out Federal Reserve chairman Ben S. Bernanke on Friday. Some expect him to announce a QE3, but whether Bernanke will oblige or not is a mystery for now. Meanwhile, gold has lost some of its shine in the past two sessions, with New York futures dropping over 5% overnight. Spot gold lost 3.8% overnight. CME has hiked margins on trading at its Comex unit for the second time this month," says Amar Ambani, Head of Research, IIFL - India Private Clients.