A sudden gust of profit-booking after mid-session due to weak European cues triggered by fall in China's manufacturing index, washed out initial gains, pulling the benchmark S&P BSE Sensex down by a whopping 252 points to close below 21K-mark at two-week low of 20,888.33.
Recently favoured second-line counters also suffered heavy losses on profit-booking by wary retail investors. As a result, the S&P BSE-Midcap and S&P BSE-Smallcap indices ended down by 1.77 per cent and 2.03 per cent , underperforming the sensex.
Selling was seen mostly across-the-board as 11 out of 12 sectoral indices closed in the red between 0.42 per cent and 3.07 per cent, with realty, capital goods, power, banking, FMCG, consumer durable, refinery and metal segments suffering the most while only IT index closed in positive terrain on the back of rise in Infosys, TCS and Wipro due to fall in the rupee value and improvement in US economy.
The BSE 30-share barometer resumed better and rallied further to nearly three-week high of 21,331.32, showing a rise of over 190 points due to better Asian trends.
However, it surrendered all of its early gains after mid-session as European markets too washed out initial rise and showed a weak trend in late afternoon deals, falling back to settle at two-week low of 20,888.33, exhibiting a drop of 252.15 points or 1.19 pct.
Similarly, the NSE 50-issue CNX Nifty also tumbled by 80.50 points or 1.28 pct to 6,221.15.
Marginal fall in India's manufacturing sector in December also weighed on the market. The HSBC India Manufacturing Purchasing Managers' Index (PMI) -a measure of factory production- dropped slightly from 51.3 in November to 50.7 in December, despite manufacturing sector activity expanded for the second consecutive month. A PMI reading of above 50 differentiates growth from contraction.
Asian stocks ended mixed after gauges of manufacturing in China declined. Indices from China, South Korea closed in the red while from Hong Kong, Singapore and Taiwan ended with minor gains and Japan market was closed on Thursday.
European markets capitulated their early gains and were trading lower in late morning deals. The CAC was down by 0.73 pct, the DAX by 0.63 pct and the FTSE by 0.41 pct.
Mr. Jignesh Chaudhary, Head Of Research, Veracity Broking Services said,"Indian markets today closed in Red due to selling pressure and profit booking in the blue chip shares, after trading strong for the better part of the day. There were more shares which declined led by biggies like L&T, NTPC, ITC and other Oil and banking sector stocks. A weak Rupee which reacted sharply to the poor manufacturing PMI data also put pressure in the market during its closing hours."
In all, 25 out of 30 sensex-based scrips closed with losses while others finished with gains. Major losers were BHEL 3.42 pct, Tata Power 3.27 pct, Coal India 3.05 pct, L&T 3.04 pct, Bharti Airtel 2.81 pct, ONGC 2.38 pct, Cipla 2.19 pct, NTPC 2.17 pct, ITC 2.08 pct, Icici Bank 2.03 pct, HUL 1.58 pct, RIL 1.50 pct, Axis Bank 1.47 pct, Tata Steel 1.31 pct, Gail India 1.31 pct, SBI 1.29 pct, HDFC Bank 1.23 pct, M&M 1.22 pct and SSLT 1.09 pct.
Among the S&P BSE sectoral indices Realty dropped by 3.07 pct followed by CG 2.84 pct, Power 2.09 pct, Bankex 1.82 pct, FMCG 1.74 pct, CD 1.73 pct, Oil&Gas 1.72 pct and Metal 1.49 pct.
The market breadth turned negative 1,564 stocks declined, 1,038 stocks gained while 129 stocks ruled steady. Total turnover rose to Rs 2,636.11 crs from Rs 1,441.17 crore on Wednesday.