The benchmark BSE Sensex plunged nearly 550 points and the NSE Nifty dropped below the 8,400-level due to concerns over stricter norms for participatory notes and slump in Chinese stock market.
European stocks and major commodity prices fell hard on Monday as concerns over China dominated financial markets in the wake of the biggest drop in Shanghai shares in eight years.
The 30-share index, which slumped below the crucial 28,000-mark in early trade, tumbled 550.93 points or 1.96 per cent to 27,561.38 and the 50-share NSE index Nifty dropped 160.55 points or 1.88 per cent to 8,361.
The gauge had tumbled by 392.62 points in the previous two sessions on muted earning figures reported by companies and weak global cues.
All BSE sectoral indices ended significantly in the red. Among them, capital goods index plunged the most by 2.8 per cent, followed by infrastructure 2.75 per cent, metal 2.29 per cent and banking 2.28 per cent.
Major Sensex losers were Tata Steel -5.17%, Hero MotoCorp -4.84%, Hindalco -4.4%, Axis Bank -4.34% and ONGC -4.12%, while Bajaj Auto (+0.41%) was the only gainer.
Markets plunged amid fears that the government may accept Supreme Court-appointed, Special Investigation Team (SIT) recommendations of stricter norms for participatory notes (P-notes) on markets, equity brokers said.
Sentiments were also hit following a sell-off in other Asian markets with over 8 per cent crash in Shanghai on worries that the Chinese economy, the world’s second largest, is heading for a sharp slowdown, they said.
Furthermore, fresh weakness in the rupee which depreciated by 7 paise to Rs 64.11 (intra-session) against the dollar too dampened the trading sentiment, brokers said.
Meanwhile, Finance Minister Arun Jaitley today said the government will not take any “knee-jerk” reaction that will adversely impact the country’s investment climate.
European equities started the week on a downbeat note, heading for their fifth straight daily fall, with worries over China’s growth prospects overshadowing some forecast-beating corporate results.
The FTSEurofirst 300 index was down 1.4 per cent at 0722 GMT, with benchmark indexes in Paris and Frankfurt broadly in line. UK stocks outperformed slightly, with the battered mining sector staging a rebound after a volatile week despite metal prices languishing near multi-year lows.
Among other Asian markets, Shanghai Composite index was down almost 8.48 per cent, Japan’s Nikkei tumbled 0.9 per cent and Hong Kong’s Hang Seng plunged 3.11 per cent.
A report by SMC Investments and Advisors said: "Asian stocks were off to a dismal start to the week on the back of offshore declines and as the fall in commodity prices continues to sap risk appetite. Ambuja Cements, Century Textiles, Tech Mahindra, Jindal Saw, Jagran Prakashan, Geometric, Tourism Finance Corp, KEC Int, MRF and Just Dial to announce their results today.
US new home sales tumbled 6.8 per cent to an annual rate of 482,000 in June from the downwardly revised May rate of 517,000. The steep drop came as a surprise to economists, who had expected new home sales to edge up to 550,000 from the 546,000 originally reported for the previous month."