Sensex plunges 320 points, hits 3-month low

Indian markets broke out of a narrow range on the downside in an unexpected turn of events Friday. The Sensex plunged 320 points or 1.87% to 16,831 while the broader Nifty index declined 101.55 points to 5,086.85. The Sensex and Nifty ended at three-month low. The benchmark indices had last traded at these levels on January 30, 2012."There are two factors that are particularly taking a heavy toll on market sentiment. One is the sharp depreciation of the rupee over last couple of weeks and two - the confusion over implementation of the General Anti-Avoidance Rule (GAAR)," Sanjay Sinha, founder, Citrus Advisors told NDTV Profit today.The rupee, trading at a 4-month low against the dollar, declined for the fourth straight day. Minister of State for Finance SS Palanimanickam's statement that India is reviewing its tax treaty with Mauritius also dented sentiments. Bulk of India's foreign investors are believed to be based in Mauritius."People don't want to have open position until they have certainty over GAAR. Today's selloff while scary is not surprising," Radhika Gupta, co-Founder/director, Forefront Capital Management said.Banking (-3.2%) and capital goods (-3.7%) stocks led the declines on the Street today. Three frontline banking stocks - HDFC Bank (-3%), ICICI Bank (-2.85) and SBI (-4.2%) - together contributed over 100 points on the downside on the Sensex. The Bank Nifty closed below the 10,000 mark, slipping 324 points.Both ICICI Bank and HDFC Bank have reported strong earnings in the March quarter. But banks are under pressure over RBI's new Basel III norms, which stipulate banks to set aside higher capital for regulatory requirements.Capital goods stocks - L&T (-4.35%) and BHEL (-4.9%) - were a drag on the index. These companies, BHEL in particular, have disappointed the Street with a weak outlook on order inflows and cancellation of orders.Barring healthcare stocks (0.24%), all other sectoral indices closed lower on the BSE. IT (-0.9%) stocks, which benefit from the weakening currency, saw comparative outperformance. All other groups of stocks declined 1-3%.On the Nifty index, 43 of the 50 stocks closed lower. Public lender Bank of Baroda (-6.1%) fell the most on account of Q4 earnings. Another government bank PNB (-4.7%) also ended at the bottom of the Nifty index. Two wheeler major Hero MotoCorp (-4.6%) fell for the second day. The company has failed to meet the Street's expectations on dividend payout.Drug maker Cipla (2.6%), IT major Wipro (0.62%) and Asian Paints (0.33%) were the top three gainers on the Nifty index.The Nifty has closed below the crucial 200 day moving average, which was an important level for stocks. But some analysts said it was unlikely that markets would fall in a hurry."Investors should wait for some time before rushing to sell stocks. 5,080 is the 50 per cent retracement of the rally from December lows to February first week and markets have held on to this levels," Shardul Kulkarni, senior technical analyst, Angel Broking said.The market breadth deteriorated and only 63 of the 500 stocks managed to advance on the BSE 500 index.Global cues, especially news coming out of Europe, also dented sentiments. Socialist Francois Hollande, who opposes austerity measures, is leading the opinion polls in France which goes to poll on Sunday..(With inputs from Reuters)

Sensex plunges 320 points, hits 3-month low

Sanjay Sinha, founder, Citrus Advisors, told NDTV Profit that concerns over the rupee and confusion over the implementation of the General Anti Avoidance Rules, or GAAR, are taking a heavy toll on the market sentiment. He is, however, hopeful that the Nif

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