Mumbai: Hopes of a pullback rally were dashed by the roaring bears, thanks to lower-than-expected October IIP data. It is now clear that India's growth engine is definitely slowing down. The first day of action-packed week was won by bears.
The benchmark index Nifty shed close to 150 points from its day high and now heading back to 4700 mark, key support area.
News flow both on global and local front has not been heartening for investors and even for the most brave-hearted traders to take a call on markets.
The Sensex closed at 15870.35 down 343.11 points or 2.12 per cent and the Nifty ended at 4764 down 102.10 points or 2.10 per cent. The breadth of the market remained dismal for most part of the day with 825 shares advancing, 1954 shares declining and 960 shares remain unchanged.
Poor IIP data reflects weakness in manufacturing demand. Metal stocks have direct correlation as prices of commodities are mainly driven by demand and supply.
The rupee cracked more than 1 per cent to a record low of 52.77 on Monday. Keep an eye on companies with un-hedged dollar denominated loans and importing raw materials. The bottomline of these companies will get murkier with every rise in dollar rates.
Metal stocks led the rally for bears followed by banks, oil&gas, realty and power stocks. IT stocks managed to buck the trend and ended in green. Out of Nifty 50 stocks, only four IT stocks locked gains.
The list of losers weigh too heavy with major players such as Tata Power, Hindalco, SAIL, SBI, Jindal Steel and Jaiprakash Associates leading the charts on the downside.
Nifty December futures added 9 per cent in open interest. The premium has also trimmed to 5 points. Nifty Open Interest Put Call Ratio now stands at 1.04 versus 1.07. Nifty 4700 Put has maximum open interest. A decisive breach below this level will trigger short covering by put writers pushing the Nifty even below 4600 mark.
Meanwhile, the euro and European stocks fell on Monday as a landmark move toward deeper economic integration at last week's EU summit failed to convince investors its sovereign debt crisis would not continue to deepen.
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