Sensex dives 714 points; analysts see a bigger crash Tuesday

In its worst session in two months, Indian equity benchmark Sensex Monday tumbled by 714 points after "unfavourable" state exit poll results for the ruling BJP, while analysts warned that a bigger crash may be in store on Tuesday due to the sudden resignation of RBI Governor Urjit Patel. This was the worst single-session fall for the benchmark BSE index since October 11.

As far as the RBI Governor's resignation is concerned, it alone has the ability to knock off 200 points from the Nifty, an analyst opined.

The Sensex tumbled nearly 714 points, or 2 per cent, to close at 34,959.72.

Similarly, the broader NSE Nifty fell 205.25 points, or 1.92 per cent, to end at 10,488.45. 

Exit polls for the recently concluded assembly elections have predicted a tight finish between the ruling BJP and the Congress in Madhya Pradesh and Chhattisgarh and a win for the opposition party in Rajasthan, impacting trading pattern on the domestic bourses in a big way.

Besides, a weakening rupee, which hit 71.44 per dollar intra-day, and fresh foreign fund outflows further pulled the key indices.

All sectoral indices on the BSE and NSE ended in the red, led by realty, banking, metal, pharma, pharma and financial stocks.

Globally, market participants remained watchful as uncertainty prevailed over the temporary US-China trade war truce.

The US markets continue to tumble for various reasons and while the 90-day ceasefire on Sino-American trade talks is on, there is little action on the ground as officials continue to give conflicting views, analysts said.

"The state assembly exit polls have shown a reducing vote share of the BJP in Madhya Pradesh and Chhattisgarh after 15 continuous years of incumbency. The poor performance of BJP will mean added uncertainty in the markets till general elections in 2019," V K Sharma, Head PCG and Capital Markets Strategy, HDFC Securities, said.

Among the Sensex constituents, Kotak Bank shares cracked over 6 per cent after the bank said it had moved the Bombay High Court against RBI's decision with respect to the bank reducing promoter holding using preference shares.

In August, Uday Kotak, the founder and promoter of Kotak Mahindra Bank, has pared down his stake in the bank to 19.70 per cent from about 30 per cent following issuance of preference shares.

Within few days, the Reserve Bank said the stake dilution by Kotak does not meet its regulatory norms on the same, something the private sector lender contested.

Other top losers include Reliance Industries, Asian Paints, Tata Motors, Adani Ports, Bharti Airtel, Sun Pharma, L&T, PowerGrid, HDFC, Axis Bank and Bajaj Auto, falling up to 4 per cent.

Coal India and Maruti were the only two gainers on the 30-share index, rising up to 0.79 per cent.

Multiple factors impacted the market sentiment as the bears held complete control of the market from opening till the closing bell, said Joseph Thomas, Head Research, Emkay Wealth Management.

This was the biggest one-day fall in the last two months for both indices, falling up to 2 per cent, he said.

On a net basis, foreign portfolio investors (FPIs) sold shares worth Rs 817.40 crore Friday, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 242.56 crore, provisional data available with BSE showed.

Brent crude oil futures was trading at 0.31 per cent down at USD 61.48 per barrel.

Elsewhere in Asia, Korea's Kospi fell 1.06 per cent, Japan's Nikkei dropped 2.12 per cent, Hong Kong's Hang Seng shed 1.19  per cent and Shanghai Composite Index tumbled 0.82 per cent.

In Europe, Frankfurt's DAX shed 0.67 per cent and Paris' CAC 40 fell 0.47 per cent in early deals. London's FTSE too slipped 0.41 per cent.