Mayhem returns to D-Street...Sensex, Nifty hit 2-yr low

After a green day in the previous trading session, the Indian stock markets resumed their downfall, as a combination of domestic and overseas headwinds continued to play spoilsport.

Breaching of a key support level on the NSE Nifty was also partly responsible for heavy selling in the afternoon. What's worse, the sharp fall today came on rising volumes as traders looked to rollover their F&O contracts to the next month series.

The decline was massive as the Nifty fell as much as ~170 points intraday after the index slid below the 4650 mark, hitting two year lows. The BSE Sensex also touched a two-year low.



"The Indian indices resumed their descent as the US government has revised down its third-quarter GDP growth rate and a preliminary manufacturing PMI gauge in China has shown contraction for November. Political turmoil is also one of the factors that is heavily weighing on the investors' morale after the Parliament was adjourned for the second successive day in the ongoing winter session," says Amar Ambani, Head of Research, IIFL.

Total turnover surpassed Rs. 2.5 Lakh crore.

Market breadth collapsed on the BSE with more than a third stocks traded on the exchange closing lower.

Still, the closing was off session lows with the Sensex recovering ~200 points from the intraday lows and the Nifty recovering ~70 points. The recovery can partly be attributed to the fact that the European indices did not fall drastically while Asian benchmarks also didn't witness as sharp a fall as in the Indian market.

Finally, the Sensex ended at 15,700, down 365 points. It had earlier touched a day's high of 15,969 and a day's low of 15,478. It opened at 16,967. The Nifty closed at 4,706, down 106 points.

The Sensex today closed at its lowest close since November 2009. It has plunged ~24% this year.

Shares of DB Realty hit 20% upper circuit while RCOM and Unitech have also rallied after the Supreme Court granted bail to five corporate executives accused in the 2G scam on surety of Rs. 5 lakh each.

Globally, Asian stocks closed mostly lower after HSBC China manufacturing gauge fell to 48.0 in November from 51.0 last month. Forecasts for the HSBC flash manufacturing Purchasing Managers Index had called for a reading of 50.1.

Meanwhile, the rupee recovered slightly against the US dollar today on the back of suspected intervention by the RBI after the Indian currency slumped to a new record low yesterday.

However, the recovery proved to be short lived and the rupee erased all of the day's gains after the euro sank ~1% versus the US dollar.

The rupee had slumped to an all-time low of 52.73 against the dollar on Tuesday, down nearly 17% from its 2011 high in July

FIIs have sold more than US$450mn worth of shares over five trading sessions till Monday, reducing the net inflows in 2011 to under US$300mn, compared to record investments of more than US$29bn seen in 2010.