Mumbai July 18 (IANS) Negative global cues and a heavy lag in FMCG major ITC stocks caused the Indian equity markets steepest fall of the 2017-18 fiscal on Tuesday.
According to market analysts a free fall in the stocks of the largest FMCG company ITC dragged lower the key equity indices following which the S&P BSE FMCG index plunged by more than 6.12 per cent.
The dip in the stocks of the bluechip firm followed the GST Council raising the compensation cess rates on cigarettes on Monday in view of the reduction in tax on the demerit good under the new indirect tax regime.
On a closing basis the wider Nifty of the National Stock Exchange (NSE) shed 88.80 points or 0.90 per cent to close at 9 827.15 points.
The 30-scrip Sensitive Index (Sensex) of the BSE which opened at 31 775.54 points closed at 31 710.99 points -- down 363.79 points or 1.13 per cent from the previous close at 32 074.78 points.
The BSE market breadth was bearish with 1 730 declines and 962 advances.
"Markets ended sharply lower on Tuesday on the back of selling pressure seen throughout the day. Heavy selling in index heavyweight ITC (on the back of increase in cigarette cess) put pressure on the indices " Deepak Jasani Head of Retail Research HDFC Securities told IANS.
"Selling in index pivotal Reliance Industries (RIL) also dragged the indices lower. Major Asian markets have ended on a positive note barring the Nikkei and Jakarta indices. European indices like CAC 40 and DAX traded lower " Jasani added.
On the currency front the rupee weakened by three paise to 64.38 to a US dollar from its previous close at 64.35.
In investments provisional data with the exchanges showed that foreign institutional investors (FIIs) purchased scrip worth Rs 317.44 crore while domestic institutional investors (DIIs) divested stocks worth Rs 975.01 crore.
"Fall in ITC shares is the biggest loss in over 25 years and investors will lose nearly Rs 60 000 crore with the new GST laws enacted on them. ITC s cigarette division contributes over 60 per cent of total revenue. So any increase or decrease in cess on cigarettes will have directly big impact on ITC " said Dhruv Desai Director and Chief Operating Officer of Tradebulls.
"Mid-caps had a weak session as the Nifty mid-cap index fell over half a per cent but the FMCG index fell over more than 6 per cent."
Sector-wise the S&P BSE FMCG index dipped by 651.93 points the oil and gas index by 109.82 points and the consumer durables index by 105.61 points.
On the other hand the S&P BSE automobile index was up 47.97 points the healthcare index by 26.20 points and the IT index by 24.24 points.
Major Sensex gainers on Tuesday were: Asian Paints up 1.82 per cent at Rs 1 146; Sun Pharma up 1.18 per cent at Rs 578.05; Axis Bank up 1.18 per cent at Rs 517; ONGC up 1.06 per cent at Rs 161.75; and Dr. Reddy s Lab up 0.83 per cent at Rs 2 715.65.
Major Sensex losers were: ITC down 12.63 per cent at Rs 284.60; Reliance Industries down 2.03 per cent at Rs 1 519.90; State Bank of India down 0.80 per cent at Rs 290.45; NTPC down 0.65 per cent at Rs 167.05; and Power Grid down 0.55 per cent at Rs 215.40.
--IANS
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