Markets tumble as Fed punctures euphoria

Mumbai: Equity benchmarks finished with heavy losses on Thursday, in tandem with global markets, as the Fed's sombre assessment of the US economy prompted investors to prune their exposure to risky assets.

The 30-share BSE Sensex tumbled 708.68 points, or 2.07 per cent, to close at 33,538.37.

Similarly, the broader NSE Nifty tanked 214.15 points, or 2.12 per cent, to 9,902. Global markets crashed after the Federal Reserve said the US faces a 'long road' to recovery, even as concerns mounted about a second wave of coronavirus cases.

The central bank projected the US economy would shrink 6.5 per cent this year and signalled holding rates at near zero through 2022. The Fed also said it will keep buying bonds to maintain low borrowing rates.

A depreciating rupee and profit booking in banking and finance counters further weighed on domestic markets, traders said. SBI was the top laggard in the Sensex pack, dropping 5.64 per cent, followed by Sun Pharma, Maruti, Bajaj Finance, ICICI Bank, Tata Steel and Axis Bank.

Only five index constituents closed in the green - IndusInd Bank, Hero MotoCorp, PowerGrid, M&M and Nestle India, spurting up to 4.49 per cent.

"Indian equity markets posted their biggest single-day drop in three weeks.

Weak global cues, adverse comments by Supreme Court in AGR case and widespread profit taking on weekly F&O expiry day pulled indices lower," said Deepak Jasani, Head Retail Research, HDFC Securities.