Sensex sinks 587 points to close below 37,000-mark, Nifty down 177 points ; Yes Bank, Vedanta, Bajaj Finance among top losers
Benchmark equity index Sensex plummeted 587 points on Thursday, pressured by heavy selling in banking and energy stocks amid weak global cues
Investor sentiment tanked after Chief Economic Adviser Krishnamurthy Subramanian virtually ruled out a stimulus package from the government
The 30-share Sensex sank 587.44 points, or 1.59 percent, to 36,472.93
The broader NSE Nifty ended 177.35 points, or 1.62 percent, down at 10,741.35
Mumbai: Equity markets closed deep in the red on Thursday after top government officials virtually ruled out a stimulus package for slowdown-hit sectors, triggering another round of selling in banking, auto and metal stocks.
A weakening rupee, which hit its lowest level in eight months, and lacklustre global cues further weighed on investor sentiment, traders said.
The 30-share BSE Sensex sank 587.44 points, or 1.59 percent, to finish at 36,472.93. The broader NSE Nifty slumped 177.35 points, or 1.62 percent, to 10,741.35.
Both the key indices closed lower for the third straight session.
Chief Economic Adviser Krishnamurthy Subramanian on Thursday said using taxpayers' money to bail out companies going through a 'sunset' phase will create moral hazards and such a step is an anathema to the market economy.
Power Secretary Subhash Chandra Garg also said low-interest rates and availability of credit to the private sector are better tools than a fiscal stimulus.
The comments have dashed hopes of some sort of a stimulus package from the government to boost growth and revive flagging consumer sentiment, analysts said.
Yes Bank was the biggest laggard in the Sensex pack, plummeting 13.91 percent, followed by Vedanta, Bajaj Finance and Tata Motors, which declined up to 7.76 percent.
ONGC, SBI, Hero MotoCorp, ICICI Bank, Tata Steel, HDFC twins and RIL also closed with losses.
Tech Mahindra, TCS, HUL and HCL Tech were the only gainers, spurting up to 1.57 percent.
"Benchmark indices continue to remain weak with the rupee hitting fresh lows and lack of news on the economic stimulus by the government... Investor sentiment was further dampened by a statement made by Chief Economic Advisor that Indian economy doesn't need fiscal stimulus to tackle slowdown.
"Besides policy uncertainty on the domestic front, weak global cues, foreign fund flow, currency and oil price movement would further determine the trend of the market," said Hemang Jani, Head - Advisory, Sharekhan by BNP Paribas.
Speaking at an event in Delhi, Subramanian stressed on the cyclical nature of a market economy.
"Since 1991 we are a market economy, and in a market economy, there are sectors which go on sunrise and then go through the sunset phase.
"If we basically expect the government to use taxpayers' money to intervene every time when there are some ‘sunsets,' then I think you introduce possible moral hazards from 'too big to fail' and as well as the possibility of a situation where profits are private and losses are socialized which is basically an anathema to way the market economy functions," he said.
Speaking at the same event, Power Secretary Subhash Chandra Garg said the reduction in interest rates and availability of credit to the private sector are better tools than a fiscal stimulus.
Garg, who was Finance Secretary till last month, also said the first-quarter GDP number is likely to be lower than the same period last fiscal.
Meanwhile, the BSE realty index was the biggest sectoral loser, cracking 6.01 percent, followed by metal, finance, oil and gas, bankex and energy.
IT index was the sole gainer, rising 0.30 percent, buoyed by a weak rupee.
The broader BSE midcap and smallcap indices followed the benchmarks, closing up to 2.19 percent lower.
Globally, markets were jittery ahead of comments from Federal Reserve Chair Jerome Powell at Jackson Hole, Wyoming, US.
Elsewhere in Asia, Shanghai Composite Index and Nikkei ended on a positive note, while Hang Seng and Kospi settled in the red.
Equities in Europe were trading lower in their respective early sessions.
The Indian rupee depreciated 33 paise to 71.88 against the US dollar intra-day.
Brent crude futures, the global oil benchmark, rose 0.65 percent to $60.69 per barrel.
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