Domestic stock markets suffered sharp losses on Tuesday led by a selloff in financial stocks amid rising COVID-19 cases in the country, a day after official data showed consumer inflation worsened last month. Benchmark indices S&P BSE Sensex and NSE Nifty 50 tumbled 2.22 per cent each during the session. The Sensex shed 816.27 points to hit 35,877.42 at the weakest level recorded during the session, and the broader Nifty slumped to as low as 10,562.90, down 239.8 points from its previous close.
The Sensex ended 660.63 points - or 1.80 per cent - lower at 36,033.06, while the Nifty settled at 10,607.35, down 195.35 points - or 1.83 per cent - from its previous close.
Besides banking and financial services stocks, a selloff in automobile, consumer goods, metal and IT shares dragged the markets lower, however buying interest in pharmaceutical counters provided some support.
All shares but three in the 50-scrip Nifty basket succumbed to losses, with IndusInd Bank, Axis Bank, Eicher Motors, Zee Entertainment and Maruti Suzuki - trading between 3.66 per cent and 5.33 per cent lower - being the worst hit in percentage terms. On the other hand, Dr Reddy's Laboratories was the top gainer on the index.
HDFC, HDFC Bank and Reliance Industries were the biggest drags on Sensex, together accounting for a loss of more than 200 points in the index.
Banking and financial stocks extended losses to a third straight session, a day after credit ratings major Moody's warned of COVID-19-related headwinds to the country's banking sector, already grappling with piles of of bad debt and a loan repayment moratorium which threatens to hurt revenue.
The Nifty Bank and Nifty Financial Services indices tanked 3.16 per cent and 2.45 per cent respectively, closing lower for the third session in a row.
Analysts say investors became wary of a quick recovery in the economy after disappointing macroeconomic data.
"CPI inflation was announced after two months and it was higher than March number due to higher vegetable and food prices. Because of higher inflation, there is less possibility of rate cuts in future. That has put a break on market optimism," Anita Gandhi, director at Arihant Capital Markets, told NDTV.
Official data on Monday showed consumer inflation - or the rate of increase in retail prices - accelerated to a worse-than-expected 6.09 per cent in June from 5.84 per cent in March, as the government released the headline reading after a gap of two months. Rising food and fuel prices pushed inflation higher.
Coronavirus cases in the world's second-most populous country rose to 906,752 as of Tuesday morning, according to the health ministry data, leaving investors concerned about its impact on the economy as many states and cities tighten restrictions again.
Equities elsewhere in Asia slipped on simmering tensions between the US and China, and persistent coronavirus concerns.
MSCI's broadest index of Asia Pacific shares outside Japan declined 0.94 per cent, and Japan's Nikkei 225 benchmark 0.87 per cent. China's Shanghai Composite, Hong Kong's Hang Seng and South Korea's KOSPI indices fell 0.83 per cent, 1.14 per cent and 0.11 per cent respectively.
European shares started Tuesday's session on a negative note, with the United Kingdom's FTSE benchmark last seen trading down 0.43 per cent in early trade. France's CAC and Germany's DAX benchmarks were down 1.79 per cent and 1.56 per cent respectively at the time.
However, the E-Mini S&P 500 futures were up 0.26 per cent, indicating a positive start for US markets on Tuesday.
(With agency inputs)
