Benchmark indices plunged in trade dragged down by bluechips like HDFC, HDFC Bank and ICICI Bank. Markets, which opened lower continued to slide throughout the day, as sustained selling pressure dragged down the indices.
The Sensex ended the day with losses of 440 points, while the Nifty ended the day with losses of 135 points. Leading the set of gainers in trade was Infosys, which rallied 2 per cent, ahead of its results to be declared later on Friday.
US Fed Minutes Spooks Markets
The Minutes of the US Fed Meet, in which there were indications that the Sept status quo on interest rates was a close call, added to the selling pressure.
Markets concluded that a US Fed rate hike in December was a near certainty, which dragged down global markets and Indian indices.
Several voting members of the US Fed, felt that a rate hike would be needed pretty soon. Rising interest rates in the US is a cause of big concern for the markets, as investors will move money away from equities into government securities.
The odds of the US Fed raising interest rates in December is higher than ever before.
Weak Chinese exports data
To compound the misery of the markets was the Chinese data, which showed that exports tumbled 10 per cent in September. In U.S. dollar terms, exports were down 3 percent and imports rose 1 per cent.
This is not good for the markets, as China is considered as a crucial trade partner. It also points to weak external demand, which if continues for long, could have an adverse impact on the global economy.
Worries over TCS results?
Markets also worried over results to be declared by India's largest IT company, Tata Consultancy Services. The results are slated later today and it is expected to be weak.
TCS ended the day marginally lower by 2.22 per cent, ahead of the company's results to be declared later in the evening.
Most of the other IT stocks were weakish in trade, apart from Infosys, which saw a solid rally. Infosys is slated to declare its results later tomorrow.
Worries over banking NPAs?
It was banking stocks that dragged down the indices today, after reports in a section of the press, which quoted Banks Board Chief Vinod Rai, as saying banks were dithering to clean-up their books.
This led to heavy selling pressure in banking stocks. Bank of Baroda and Punjab National Bank, fell as much as 5 per cent, while another PSU major, Bank of India also dropped 5 per cent.
Private sector banking major, ICICI Bank was down 4 per cent in trade, as banks saw frenzied selling.
Metal stocks melt
Metal stocks saw some serious selling pressure with Hindalco and Tata Steel among the top losers in trade. Both the stocks lost almost 4 per cent in trade.
Meanwhile, the rupee was trading weak at 66.88 to the US dollar.