Dropping for the fourth straight session, the Sensex on Thursday slumped to its six-month low amid heightened risk aversion, sparked by foreign capital outflows and lingering worries over the government's demonetisation decision.
BSE benchmark Sensex slumped over 71 points in choppy trade to hit about six-month low of 26,228, while the Nifty failed to hold on to the crucial 8,100-mark.
"The impact of currency crunch continues to disrupt the market's momentum and it is oscillating between gains and losses and finally ended in negative. The fear of any
downgrade in earnings has pushed investors to stay on the sidelines," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.
Trading sentiment remained distinctly weak due to cash crunch arising out of the government's move to demonetise Rs 500 and Rs 1,000 notes to flush out black money amid concerns about its impact on small and medium-sized businesses which largely run on cash.
The 30-share Sensex resumed higher at 26,304.90 and hovered in a range of 26,449.87 and 26,155.40 before ending at 26,227.62, showing a loss of 71.07 points or 0.27 per cent. The index had last settled at 25,881.17 on May 25, 2016.
Sensex has dropped 1,290.06 points or 4.69 per cent in the last four days.
Shares of telecom, tech, IT, finance and banking sectors moved down due to selling pressure, while utilities, power, metal, refinery and healthcare firmed up on good buying.
Software exporters such as TCS, Infosys and Wipro lost up to 2.20 per cent after industry body Nasscom on Wednesday lowered the sector's growth outlook to 8-10 per cent for the current fiscal in view of global uncertainties and currency volatility.
The 50-share Nifty dropped by 31.65 points or 0.39 per cent to 8,079.95, closing below the 8,100-level after nearly six months. The Nifty had last settled at 8,069.65 on May 26, 2016.
Foreign funds continued their selling pressure, offloading shares worth a net Rs 1,957.04 crore on Wednesday, as per provisional data released by the stock exchanges.
Participants are awaiting Fed chair Janet Yellen’s testimony later in the day to get a sense of where the US economy is headed in the aftermath of Donald Trump's victory in the presidential poll.
In overseas markets, European and Asian stocks witnessed a mixed trend.
Key indices in China, Japan, Singapore, South Korea and Taiwan firmed up to 0.70 per cent, while the Hong Kong index eased by 0.08 per cent.
European shares, after a lower beginning, turned positive in late morning deals.
Photograph: Reuters.
