After rallying for two sessions, the Sensex and Nifty closed over 1% lower on Monday as worries about global trade war and prevailing rupee crisis dampened investors mood despite the government announcing steps to stem a steep fall in the Indian currency.
While the Sensex fell 505 points or 1.33% to 37,585 level, the Nifty lost 137 points or 1.19% to 11,377 level.
Subdued Asian and European markets due to escalating trade war between the US and China mainly led to a caution on domestic bourses, brokers said.
Following the sharp fall in stocks, the market capitalisation (m-cap) of BSE-listed companies dropped by Rs 1.14 lakh crore to Rs 1,55,22,343 crore.
Also, more than 140 stocks hit their 52-week low levels on BSE.
VK Sharma, Head, Private Client Group & Capital Market Strategy at HDFC Securities said," PM's review meeting over the weekend on economy did not bring out any immediate trigger for the stocks prices to catapult higher. Stocks and forex had high hopes on the outcome and both markets promptly gave up their recent gains. Nifty gave up 1.2% today and with today's fall, it has lost 3.2% from its recent highs. Rupee also gaped down and could not recover throughout the day. Metal stocks are bucking the trend and likely to remain on investors' radar as firm commodity prices are aiding profitability.
President Donald Trump wants to impose tariffs on $200 billion of Chinese goods, the signals that the trade jitters will continue to hang over global financial markets for the time being."
The losses came after two sessions of gains ahead of economic review held by PM Narendra Modi in a weekend meeting.
The Sensex had rallied 677.51 points in the previous two sessions on sustained buying by domestic institutional investors. Top Sensex losers were Sun Pharma (2.85%), HDFC (2.47%), and Tata Motors (2.35%).
Top Sensex gainers were PowerGrid (0.70%), TCS (0.40%) and Adani Ports 0.37%. BSE Midcap and small cap indices fell 124 points and 8 points, respectively.
Meanwhile, on a net basis, foreign portfolio investors (FPIs) bought shares worth Rs 1,090.56 crore, while domestic institutional investors (DIIs) made purchases to the tune of Rs 115.14 crore on Friday, provisional data showed.
Mustafa Nadeem, CEO at Epic Research said," Nifty fails to breach previous swing high as the correction continues. Nifty failed to surpass its previous swing high placed at the zone of 11,550 - 11,560 as bears take control of the falling downward channel on the daily scale. Nifty has been in a downward channel on the daily chart and it becomes very critical for the prices to stay above this channel to put bulls back in the game. The lower top and lower bottoms continued while we expect Friday's top at 11,523 to be a lower top. The downward move shall be continued to a lower trend line which comes at 11,160 - 11,120.
As a tactical tool, we maintain a cautious stand while continue to remain bearish in short term with sell on highs strategy."
Banking stocks led the losses with the BSE bankex falling 330 points to 30,290 level. Bank Nifty too fell 343 points to 26,820 level.
BSE consumer durables index too fell 259 points to 20,476 level.
Of 19 BSE sectoral indexes, 16 ended in the red. Market breadth was negative with 1282 stocks rising compared to 1441 falling on the BSE. 191 stocks were unchanged.
Global markets
Global markets were mostly lower on Monday following reports that President Donald Trump will place tariffs on $200 billion more in Chinese goods, despite a possible meeting to iron out tensions between the world's two largest economies.
In Europe, France's CAC 40 fell 0.4 percent to 5,331.94 while the DAX in Germany dropped 0.5 percent to 12,062.13. Britain's FTSE 100 declined 0.3 percent to 7,283.65. Wall Street was set for a muted open. Dow futures fell less than 0.1 percent to 26,178.00. S&P 500 futures shed 0.1 percent to 2,910.00.
South Korea's Kospi fell 0.7 percent to 2,303.01 and Hong Kong's Hang Seng index tumbled 1.3 percent to 26,932.85. The Shanghai Composite index lost 1.1 percent to 2,651.79. But Australia's S&P/ASX 200 rose 0.3 percent to 6,185.00. Japanese markets were closed for a national holiday. Stocks fell in Taiwan and most of Southeast Asia.