Sensex, Nifty Plunge 3% Each On Expiry Jitters, Weak Global Cues

India's benchmark indices recorded their worst single-day drop in more than over four months as expiry jitters and weak global cues weighed on investors.

The S&P BSE Sensex ended 2.9%, or 1,114 points, lower at 36,553. The NSE Nifty 50 Index, too, dropped 2.9%, but managed to close above the 10,800-mark. Both indices have now posted losses for six consecutive sessions.

Indian markets cracked due to certain technical factors and expiry-related pressures, said Deven Choksey, managing director at KR Choksey Investment Managers. "If there is a sharper crack, then money waiting on the sidelines could come in. Believe banking and frontline IT stocks provide a good opportunity at current or slightly lower levels."

According to Sudip Bandyopadhyay, chairman at Inditrade Capital Ltd., foreign investors have been turning risk averse and the selling pressure is being reflected in the Indian markets. "We are seeing a correction after the markets rose almost 50% from the March lows. Macro fundamentals have not improved as well," he told BloombergQuint on the phone.

Foreign investors sold a net $241 million worth of Indian stocks so far this week, Bloomberg reported. That's the fastest pace in about three weeks.

Asian stocks fell and th U.S. futures fluctuated after Federal Reserve officials warned that more fiscal stimulus is needed to sustain the economic recovery.

Domestic economic factors, U.S. elections, geopolitical tensions and the Fed's statements that more stimulus is needed has kept markets on tenterhooks, according to Mayuresh Joshi, head of equity research (India), William O’Neil & Co. "Valuations were also stretched from the humongous recovery we have seen in the past five months but with all issues glaringly coming to the fore, the long overdue correction came through, albeit at a ferocious pace."

Across-The-Board Cuts

• Nine of the 50 Nifty stocks ended with cuts of over 5% each.
• Reliance Industries Ltd., Infosys Ltd., and Tata Consultancy Services Ltd. were the biggest draggers.
• Coal India Ltd. was the only stock to end at its 52-week low.
• Only two Nifty stocks, Bharti Infratel Ltd. and Hindustan Unilever Ltd. ended with gains.

All sectoral indices ended with losses. The Nifty IT and Nifty metal indices were the top sectoral laggards, ending with losses of over 4% each.