The BSE Sensex dropped 150 points while the Nifty came close to test the 5,550 mark in early trade Thursday. The sharp fall in markets come amid political uncertainties after Trinamool Congress quit the ruling UPA alliance to protest against hike in fuel prices and the decision to allow foreign investment in the retail sector.
At 09.55 a.m., the Sensex traded nearly 100 points or 0.5 per cent lower at 18,398 while the Nifty declined 36 points to 5,564.
Unwilling to give in to Mamata Banerjee's demands, the Congress has virtually written off her differences as irreconcilable and is trying to consolidate the support of other key partners to ward off mid-term elections. The ruling coalition is in a minority without Ms Banerjee and the 19 Lok Sabha MPs of her Trinamool Congress.
"It's time to wait and watch. It is difficult to understand why can't there be backroom discussion between two parties. The kind of noise coming through is dangerous. There is a sense of complacency among political parties," SV Prasad, chairman of Chime Consulting said.
Even if there is a partial rollback the big challenge for the government is how they manage their public image, he added.
The Sensex is trading at a 14-month high after a sharp run-up fuelled by a series of reforms initiated by the government and global liquidity easing. Global cues were also weak further weighing down on sentiments today.
Banks, metals, power, realty, and capital goods stocks saw over 1 per cent cut in early trade. But the real crack came in retail and aviation stocks.
Pantaloon Retail traded 5 per cent lower while Trent shares fell nearly 4 per cent. Kingfisher Airlines slumped nearly 8 per cent while SpiceJet traded 3 per cent lower.
On the Nifty, 35 of the 50 stocks traded lower. Reliance Infra led the losses, down 3.6 per cent. Heavy equipment maker BHEL also traded 3 per cent lower.
IT major HCL Tech led the gains on the Nifty, rising nearly 2 per cent. Other IT stocks - TCS and Wipro - were also among the top Nifty gainers.
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