The benchmark BSE index Sensex fell to its lowest level in three months as investors indulged in trimming their bets after the minutes of the US Federal Reserve’s September meeting indicated a possible rate hike this year.
Caution ahead of key quarterly results dragged down heavyweights in financial, technology and industrial sectors, with weak Chinese data hurting global risk appetite.
Software exporter Tata Consultancy Services is expected to report results today, ahead of Infosys' results, which is due on Friday. TCS stock ended the session down by 2.17 per cent.
The Sensex touched a high of 28,042.62 and low of 27,563.84.
The broader NSE index closed down 135.45 points or 1.56 per cent at 8,573.35. The index hit its lowest intra-day level since August 11.
Barring IT, all other BSE sectoral indices ended in the red. Among them, banking index fell the most by 2.18 per cent, realty 2.17 per cent, metal 1.91 per cent and consumer durables 1.88 per cent. Only IT index was up 0.18 per cent.
Major Sensex losers were Adani Ports (-4.68%), HDFC (-3.83%), ICICI Bank (-3.56%), Reliance (-3.49%) and Tata Motors (-3.17%), while the top five gainers were Infosys (+2.19%), ONGC (+1.7%), Maruti (+0.49%), Cipla (+0.22%) and Hero MotoCorp (+0.11%).
China trade
Indexes in Asia's second-largest economy tracked losses in regional shares after weak China trade data rekindled global growth worries.
China's September exports fell 10 per cent from a year earlier, far more than markets had expected, while imports unexpectedly shrank 1.9 per cent.
“China has been a concern for a very long time and today's data indicates that exports are not up to the mark. So markets are seeing a correction. But going ahead, focus remains on quarterly results,” said AK Prabhakar, head of research at IDBI Capital.
Industrial output
Domestic sentiment was also hit as industrial output remained in the negative for the second month in a row, contracting by 0.7 per cent in August due to a slump in manufacturing, mining and capital goods segments.
Asian stocks stumbled to three-week lows and U.S. stock futures and Treasury yields fell after China’s September trade data showed a sharp decline in exports, raising fresh concerns about the health of the world’’ second biggest economy.
The S&P 500 and the Dow Jones industrial average indexes ended Wednesday’s session with small gains as expectations for timing on a rate hike were largely unchanged after US Federal Reserve minutes and investors waited on earnings reports.
A report by SMC Global said: "Asian stocks held near three-week lows and the greenback consolidated recent gains on Thursday after minutes of the last US Federal Reserve policy meeting indicated a December rate increase was still on the cards. Most US stocks were little changed Wednesday as Federal Reserve minutes offered investors few new insights about next interest-rate increase. According to Bank of Japan policymaker, Yutaka Harada, negative interest rate policy is unlikely to hurt banks' business conditions and deteriorate the economy, and the central bank should take additional easing measures when needed without hesitation.''
"It is unlikely that in the current situation the negative interest rate policy would affect financial institutions business conditions and deteriorate the economy as a whole,'' Harada said in a speech to business leaders in Nagano.