Sensex sinks over 450 points, Nifty falls below 8,000-mark

Domestic equity markets fell more than 1.7 per cent on Thursday with the broader Nifty breaking the psychologically important 8,000-level for the first time in more than a month, on worries over foreign investor sales and a likely weak monsoon.

While the BSE Sensex fell 469.52 points to 26,370.98, the NSE Nifty fell 159.10 points to 7,965.35, breaking the 8,000-level for the first time since May 7.

Technical analysts say a close below the 8,000-level may increase probability of the NSE index falling to the 7,800-level. UBS had on Wednesday reduced its target for the NSE index to 8,400 from 9,200, citing slow pace of growth recovery and monsoon forecasts raising concerns over inflation.

Investors are concerned that a weak monsoon may delay further interest rate cuts by the Reserve Bank of India and even make the Narendra Modi government take populist measures or at least delay key reforms, including the one on land acquisition.

Blue chip stocks led the declines. Reliance Industries fell 3.1 per cent while ICICI Bank lost 1.32 per cent. Housing Development Finance Corp lost 2.02 per cent and Tata Motors fell 3.61 per cent.

Overall market breadth remained weak on the BSE as 783 stocks ended with gains while 1,856 closed with losses.

Only four out of 50 stocks in the Nifty stood gainers.

Overseas investors have sold nearly $112 million worth of cash shares in June so far, adding to the $902.38 million worth shares sold in the previous month, depository and exchange data showed, amid worries over slow reforms and retrospective taxes.

Amar Ambani, Head of Research, IIFL, said, "The current turmoil in the market cannot be blamed on local reasons only. With a lot of investor appetite for other emerging markets, global investors are changing their allocations accordingly. India, which enjoyed an overweight position so far is beginning to feel the heat as money is moving to other markets."

"Falls are surprising if one looks at the strong internals of Indian economy. Foreign sales should abate as reforms pick up," said G. Chokkalingam, founder, Equinomics, a Mumbai-based research and fund advisory firm.

(With inputs from Reuters)