Four reasons why Nifty fell below 8,000-mark

The National Stock Exchange Nifty fell nearly 2 per cent on Thursday as selling by foreign investors continued amid worries that a likely weak monsoon may delay key reforms and further cuts in borrowing costs.

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.

Four reasons why the investors were at a loss on Thursday -

UBS cut Nifty target: The global financial services major on Wednesday reduced its target for the NSE Nifty to 8,400 from 9,200, citing slow pace of growth recovery and monsoon forecasts raising concerns over inflation.

Weak Monsoon Estimates: According to market experts, expectation of weaker monsoon put further pressure on the domestic equity market on Thursday. The India Meteorological Department (IMD) downgraded the monsoon forecast from 93 per cent to 88 per cent of the long-period average. In India, around 70 per cent of the total agriculture is still dependant on rains.

Tepid growth in corporate earnings: There were high expectations from the government with regards to reforms and measures to kickstart the investment and capex cycles which in turn would help turn around the growth in the economy. However, poor Q4 earnings growth showed that the turnaround was yet to take shape. According to UBS, Nifty earnings growth for FY15 at 2 per cent was lower than expectations.

No more rate cuts: Cautious commentary of the Reserve Bank of India (RBI) on June 2 indicated that the room to cut rates further during this year was restricted.

"The coming quarterly results are not likely to improve... banking sector continues to remain in stress and US may start increasing interest rates. All this indicates near-term headwind in the equity market," Sunil Jain, head, equity research (retail), Nirmal Bang, told Businesstoday.in.