Sensex and Nifty lose 1% each in all-round selling

After two straight days of upswing, the Indian equity markets ended in the red, as investors remained risk averse amid speculation of further rate hikes and earnings downgrades. Weak global markets also affected sentiment on the domestic bourses after downbeat manufacturing data from Australia to the US fueled worries about the state of the world economy.

The BSE Sensex ended at 18,109, down 204 points or 1.1%. It had earlier touched a day's low of 18,037 after opening at day's high of 18,283.



The NSE Nifty closed at 5,456, losing 60 points or 1.1%. It had earlier been as low as 5,433 and a day's high of 5,496. It opened at 5,493.

The BSE Small-Cap and BSE Mid-Cap indices closed ~1.5% each.

Barring Pharma and Oil & Gas indexes all the other sectoral indices on the BSE were in the red. The BSE Realty index was the top loser, down 2%. The BSE Metals, BSE Banking and BSE IT indices lost 1.8%, 1.7% and 1.5%, respectively. The BSE FMCG and the BSE Capital Goods indices were down 1% apiece. Select Power, PSU and Auto stocks gained.

"The NSE Nifty remained under pressure throughout the day and hovered around the 5450 levels. The index found support at its rising trendline. If it falls below this level, there could be more selling. Immediate resistance is seen at ~5575. In case of further downside, it may find support around 5365.

Meanwhile, the Government is trying its best to convince all that there is no policy drift and that reforms are on track. The monsoon session will be a key test, as a spate of crucial bills are slated for presentation," says Amar Ambani, Head of Research, IIFL - India Private Clients.

The US markets ended with a negative bias after a widely followed gauge of manufacturing expanded at the slowest pace in two years last month. The data sparked concern about the health of the world's largest economy, partly offsetting the euphoria over the US debt deal.

Asian markets closed sharply lower while the European markets too extended the previous session's selloff. US stock futures pointed to a lower start on Wall Street.

With today's losses, European stocks are down 10% from this year’s high, becoming the first major market to enter a so-called correction, as falling Spanish and Italian bonds showed that the region's debt crisis is spreading.

Italian and Spanish government bond yields jumped on renewed fears over the euro-zone debt crisis.

Swiss franc hit an all-time high against the euro and the US dollar. The greenback was weak against the yen amid reports that the Japanese government might intervene in the markets to check the currency's recent strength.

Gold rose toward a record in London as concern about global economic growth boosted demand for the yellow metal as a sore of value. Gold's advance today was also underpinned by weekend's last-minute deal to avoid an unprecedented US debt default and the first bullion purchase by Korea in 13 years.