Bombay Stock Exchange (BSE) sensex closed at a four month low by shedding nearly 67 points on Wednesday as weak global trends triggered heavy fund outflows.
The BSE bench mark 30 share index lost 66.60 points to reach 16,479.59, dragged down by sharp declines in Reliance industry and banking stocks. Reliance Industries dropped for the sixth day by losing 1.91 per cent to Rs 695.10 after it cut the estimates for actual natural gas reserves available in its Indian blocks.
Banking stocks continued their lackluster performance in the month as State Bank of India fell 3.7 percent on Wednesday, while ICICI Bank fell 1 percent.
Global worries over the eurozone hit Asian shares very hard as they touched their lowest in three months. The political crisis in Greece post general elections has worsened investors' fear over the euro debt crisis. The Euro touched a 15-week low against the dollar.
In India, worries on the new taxation policy continued as fund outflow from the market was evident. In the last two sessions, foreign investors have exited Indian holdings to the tune of 10 billion rupees in net sales, Reuters reported quoting the provisional exchange and regulatory data.
The major gainers on Wednesday were ITC (5.3 percent), Generic drug maker Ranbaxy Laboratories (4.2 percent), Tata Consultancy Services (2.1 percent), Bharat Heavy Electricals (2.1 percent) and Larsen & Toubro (1.5 percent).
Gold Hits Four Month Low
Gold prices dropped for the third day on Wednesday to reach a four month low as the continuing tensions in the eurozone, after the general elections in Greek and France, prompted investors to prefer dollars and German government bonds over the yellow metal, Reuters report said.
Spot gold fell by 1.2 percent to $1,585.01 an ounce Wednesday after losing more than 3 percent in this week.
It's not as though the escalation of the political risk in Europe is doing anything positive for gold prices at all and this is totally different to how we were between 2008 and 2010, when all the correlations were totally reversed and the weakening of the euro actually led to a strengthening in the gold price, Reuters reported, quoting Natixis head of commodity research Nic Brown as saying.
This very much suggests that we are not getting demand for gold from European investors. The dynamic is purely from the impact of the crisis on to the FX market and from that, directly on to the gold price, he added, as per the Reuters report.
The gold price trajectory indicates a rise of just 1.4 percent from the rate on same date in the previous year. While it had registered a gain of nearly 14 percent in the last week of February on a year-ago on the date price.
Investors believe gold will remain low till the dollar weakens and the euro strengthens, pointing to gold's correlation with the euro as both assets move in tandem, Reuters reported.