BSE Sensex ends 539 down; banks, metals, realty bleed

4:00 pm Index check: Bankex (down 4 percent), Metals (down 4.9 percent), Realty (5.5 percent) indices lost the most during the day's trading.

3:50 pm RBI action: The Reserve Bank of India (RBI) is likely to soon start placing surplus government funds with banks through overnight auctions at market-determined rates, two sources with direct knowledge of the matter said, a step aimed at easing lenders' cash constraints and boosting lending.

Currently, the government parks all its excess cash with the RBI.

Delays and cuts in government expenditure early this year as the government sought to rein in its fiscal deficit had forced banks to borrow about 1 trillion rupees daily from the central bank for much of 2013.

3:40 pm Commodity update: India, the world's biggest buyer of gold, will levy 0.01 percent commodities transaction tax on futures contracts of non-agricultural commodities like precious, base metals, oil and gas, from July 1, the finance ministry said in a statement.

The tax was proposed in the budget in February. India has 21 commodity bourses, including six operating at the national level. Foreigners are still not allowed to trade in futures, but can buy stakes in commodity exchanges.

3:32 pm Losing stocks: Jindal Steel (down 9.62 percent), Tata Steel (down 6.25 percent), Hindalco (down 6.24 percent), BHEL (down 5 percent) and Sterlite Industries (down 4.5 percent) are big losers of the day.

3:30 pm Market closing: The Sensex ends 539.00 points down at 18706.70, and the Nifty slips 166.35 points to 5655.90. About 664 shares have advanced, 1629 shares declined, and 123 shares are unchanged.

Don't miss: Market reaction to Fed statement idiotic, says Samir Arora

The cuts get deeper in the last trading hour of the day. The Sensex is down 537.62 points at 18708.08, and the Nifty slips 169.45 points to 5652.80. About 574 shares have advanced, 1638 shares declined, and 112 shares are unchanged.

Most of the stocks are on a losing spree while Wipro is up 1.5 percent and Sun Pharma is up 0.5 percent. Jindal Steel is down 9 percent, Hindalco and Tata Steel are both down 6 percent each.

02:50pm Realty stocks hit quite badly amid heavy selling pressure; the BSE Realty Index tanked 5 percent followed by metals with 4.3 percent losses.

Power, Oil & Gas and Bankex are down 3 percent each.

Apollo Tyres bounced back with more than one percent gains for the first time in last six sessions. The stock lost more than 33 percent in previous five sessions, after the company decided to buy US-based Cooper Tire for Rs 14,500 crore.

Jubilant Foodworks and Voltas rose 1.5 percent and Future Retail gained 1 percent. Vakrangee Software rallied nearly 3 percent.

Sobha Developer outperformed, rising 0.5 percent while other realty stocks are under pressure.

02:40pm The government notified commodities transaction tax (CTT) that will be levied from July 1.

GMR Infrastructure shares fell 4 percent amid large volumes; more than 19.8 lakh equity shares changed hands at Rs 19.10 via two block deals on the Bombay Stock Exchange.

On the National Stock Exchange, 11 shares declined for every two share advancing.

Repco Home Finance gained 0.4 percent amid hefty volumes, after more than 3 lakh equity shares changed hands at Rs 210 via block deal on the NSE.

02:30pm The BSE Sensex dropped 502.46 points or 2.61 percent to 18,743.24 and the NSE Nifty is down 159.95 points or 2.75 percent to 5662.30.

The Indian rupee depreciated to 59.77 per dollar as against previous day's closing of 58.70 per dollar.

Nifty put call ratio declined to 0.89 as against 0.94 seen in previous session. Nifty June 5700 Call added 36.6 lakh shares in open interest and 5800 Call added 35.5 lakh shares in open interest.

Jaiprakash Associates plunged 7 percent, after Jaypee Cement shelved its plan sell Gujarat unit on valuation issue, reports CNBC-TV18 quoting cogencis. Jaypee Infratech is down 5 percent.

Shares of Reliance Industries , ICICI Bank , HDFC Bank and Mahindra & Mahindra lost 4 percent while index heavyweight ITC is down 3 percent.

02:20pm Equity benchmark indices extended fall to 2.4 percent in afternoon trade, tracking further fall in European markets after Federal Reserve's chairman Ben Bernanke statement saying if the economy continues to improve the asset-purchasing program could start winding down towards the end of 2013 and wrap up in 2014.

The BSE Sensex is down 459.32 points or 2.39 percent at 18786.38, and the Nifty is down 148.30 points or 2.55 percent at 5673.95.

France's CAC, Germany's DAX and Britain's FTSE are down 2 percent each.

1:56 pm Market check: The Sensex is down 483.78 points at 18761.92, and the Nifty slips 154.40 points to 5667.85.

1:30 pm Bond market: NTPC Ltd, India's largest power producer, scrapped its bond sale scheduled for Thursday, after a sell-off in government bonds caused worries about the pricing of its debt, four sources with direct knowledge of the bond sale said.

The firm was planning to raise up to Rs 1000 crore through an issue of dual tranche bonds.

1:22 pm  Gold update: Gold fell for a fourth straight session on Thursday to its lowest level since a 15 percent plunge in mid-April, after the US Federal Reserve signalled it would slow the pace of bond purchases later this year, reports Reuters.

A scale-back of the USD 85 billion monthly asset purchases is likely to weaken support for gold prices, already down about 20 percent this year due to rapid outflows from exchange-traded funds and slowing demand in top consumers, India and China.

Check out: Govt is ready to take step to curb rupee volatility, says Rajan

The market is still reeling under selling pressure as the Sensex is down 391.99 points to be at 18853.71 and the Nifty slips 129.60 points to 5692.65. About 559 shares have advanced, 1519 shares declined, and 129 shares are unchanged.

Commodities and rate sensitives are the biggest drags. Outside the index, the breadth collapses, midcap infra and power see deep cuts.

The rupee expectedly fell to a fresh low of 59.90 on concerted FII selling of emerging market bonds and equities; but the rupee recovered from lows on corporate flows and on statements of the chief economic advisor

Asian markets get hammered, Europe too is jittery after the Fed signaled an end to its bond-buying programme later this year. In worrying economic data, Chinese PMI slipped to a 9-month low.

12:59pm Geoff lewis, ED of JP Morgan asset management sees a gradual recovery in Indian economy. According to him, markets have overreacted to Fed's statements.

Among emerging markets, he says he is overweight on India.

Also Read: Market reaction to Fed statement idiotic, says Samir Arora

The BSE Sensex is down 359.68 points or 1.87 percent at 18886.02, and the Nifty is down 122.10 points or 2.10 percent at 5700.15, but the fall in broader markets is less compared to benchmarks.

The BSE Midcap and Smallcap indices declined 1.3 percent each.

Shares of DLF and Jindal Steel topped the selling list, losing 7 percent each followed by Hindalco , Tata Steel , Sterlite Industries, NMDC and Jaiprakash Associates with 4-5 percent losses.

12:50pm Experts feel the rupee depreciation, because of the US Federal Reserve's decision to start reducing the quantum of its monetary stimulus and halt it completely by mid-2014, will have a larger impact on countries like India .

Emkay's head of research Dhananjay Sinha says impact of currency depreciation could worsen the current account deficit (CAD) in the immediate term as the immediate price impact will bloat imports and also induce inflationary pressure. "We maintain CAD projection for FY14 around USD 110 billion or over 5 percent of GDP," he adds.

12:45pm The sell off seen in Indian bond market on Thursday is due to Federal Open Market Committee (FOMC) decision of gradually tapering quantitative easing, says Mohan Shenoi, Kotak Mahindra Bank .

The 10-year bond yield today rose 10 basis points to 7.36 percent, triggering a halt in trading. Later, Fixed Income Money Market and Derivatives Association of India (FIMMDA) said that Indian government and state bonds will have no trading bands for Thursday, after trading in some debt had been halted due to circuit breakers.

12:40pm European markets opened lower on the possibility of Federal Reserve tapering its bond purchase programe. France's CAC lost more than 2 percent while Germany's DAX and Britain's FTSE slipped 1.7 percent.

France data watch:

Flash manufacturing PMI increased to 16-month high at 48.3 in June as against 46.4 in previous month.

France's flash services PMI jumped to 10-month high at 46.5 in the month of June from 44.3 in May while its flash composite PMI rose to 46.8 versus 44.6 during the same period.

The BSE Sensex is down 414.89 points or 2.16 percent at 18830.81, and the Nifty is down 133.05 points or 2.29 percent at 5689.20.

Gold dropped over 4 percent in last two days that is down 1 percent now at USD 1328.97 per ounce.

12:30pm Brokerage house Motilal Oswal sees HCL Tech and Hindalco as the key beneficiaries of rupee depreciation , while Bharti Airtel and Maruti Suzuki are seen the key losers.

The fall in rupee depreciation will bolster Hindalco's (down 6.5 percent) standalone revenues which are mainly dollar linked, while HCL Tech (down 1.4 percent) has the maximum EPS sensitivity to movements in currency.

12:20pm Equity benchmarks crashed more than two percent, weighed down by the depreciating rupee after the Federal Reserve chairman Ben Bernanke said if the economy continues to improve the asset-purchasing program could start winding down towards the end of 2013 and wrap up in 2014.

The BSE Sensex dropped below the 19000 level, losing 400.94 points or 2.08 percent to 18844.76, and the Nifty is down 128.25 points or 2.20 percent at 5694.

More than five shares declined for every share advancing on the National Stock Exchange.

Indian rupee fell by Rs 1.11 to Rs 59.82 per dollar, after hitting a record low of 60 per dollar.

11:52 am Market check: The Sensex  slips further 406.80 to 18838.90, and the Nifty is down 131.50 points at 5690.75.

11:47 am Bond market: The Reserve Bank of India is unlikely to cancel Friday's Rs 15000 crore bond auction for now, officials close to the development told Reuters on Thursday, reports Reuters.

The 10-year benchmark 7.16 percent 2023 bond yield eased 3 basis points from the day's high to 7.33 percent, as expectations of bond cancellation fuelled mild buying.

Officials will wait for the outcome of the underwriting auction to gauge demand for these bonds.

11:45 am Brokerage view:  Nomura has upgraded HDFC Bank to buy rating from neutral with a target of Rs 780. It believes the bank is well set to benefit from the following catalysts 1) operating leverage kicking in from its rural branch expansion in the last two years, 2) a boost to its fee income from the investment banking franchise and 3) a robust CASA franchise which has remained at or above the 45% levels consistently for the last several years.

The stock is at Rs 642.95, down Rs 22.10, or 3.32 percent on the BSE.

11:35 am Chief Economy Advisor Raghuram Rajan has said that bond buy tapering doesn't mean US will unload bonds in market. Stressing that the 'markets are overshooting as they tend to do in such times', Rajan adds that gold imports are coming off peaks. Addressing the press, he assured that the government is not short of actions and tools if and when need arises. He also said that Finance Ministry is meeting today on improving competition in markets.

11:20 am FII view: Warren Buffett is right and we are all idiots to over analyze everything - even things, which are nearly laid down in stone. That's what fund manager Samir Arora of Helios Capital thinks of the market reaction to Chairman Ben Bernanke statement that Fed will start slow the pace of its bond purchases later this year and bring them to a halt around mid-2014.

"We in the finance industry are more a bunch of overpaid, underworked people who are all very intellectually superior but have forgotten the original purpose of finance," he remarks in an interview to CNBC-TV18.

US stocks fell sharply, the dollar rose and US bond prices fell, lifting the yield on the benchmark 10-year Treasury note to levels not seen since March 2012, as traders saw Bernanke's remarks and the policy panel's statement as a clear step toward a reduction in the central bank's bond buying.

Arora says all the reports so far broadly expected the Fed tapering to happen by year-end or early next year, but not one report said it will never happen. "For it to be brought forward to September just means that you've brought something (early) which was more or less done," he says.

Don't miss: Nifty may struggle to hold 5500, rupee holds key, says Geosphere

The market continues to bleed as nervous investors continuously off-load stocks. The Sensex is down 378 points at 18866, and the Nifty is down 124 points at 5697. About 398 shares have advanced, 1257 shares declined, and 90 shares are unchanged.

Sun Pharma , TCS and Wipro are gainers in the Sensex as most stocks are reeling under selling pressure. Jindal Steel (down 6.34 percent), Hindalco , Tata Steel , ICICI Bank and Sterlie Industries are key losers in the Sensex.

The rupee expectedly fell to a fresh low of 59.90 on concerted FIII selling of emerging market bonds and equities. However, the rupee recovered from lows on corporate flows and on expectation of government action given statements of the chief economic advisor

Dollar strengthens to 81.5, while euro weakens to 1.32 and yen to 96.5. Other emerging markets currencies like Brazil is down 2 percent, Malaysiya is down 1.5 percent and Korean won is down 1 percent.

Bonds opened sharply lower on expected selling by FIIs and trading was suspended when several bond yields rose by 10 basis points. Trading has since resumed and some short covering was seen.

In commodities, WTI Crude slips significantly to USD 97.5, Brent relatively stable at USD 105 and gold is down 2.2 percent at USD 1343 per ounce.

10:50am Sun Pharma shares outperformed other largecaps in Nifty 50, rising 1.7 percent amid selling pressure seen in Indian benchmark indices. It is on buyers' radar because of sharp fall in rupee. Indian rupee depreciated by 88 paise to 59.59 per dollar, after hitting a record low of 59.87 in early trade.

The BSE Sensex is down 401.12 points or 2.08 percent at 18844.58, and the NSE Nifty is down 130.70 points or 2.24 percent at 5691.55.

Declining shares outnumbered advancing ones by 1224 to 403 on the Bombay Stock Exchange.

10:27 am: Brokerage house Nomura says the automobile sales numbers for May were weaker than its expectations, and shows there are no signs of revival yet.

"There has been slowdown in the LCV segment as well over the last 2 months; light commercial vehicles industry volumes were flattish in Apr-May 2013. This possibly reflects some slowdown in consumption demand in the economy. If this trend continues, then there could be downside risks to our industry growth estimates for both passenger vehicle and commercial vehicle segments," the brokerage said in its note to clients.

10:20 am: Sellers are tragetting frontline shares. Midcaps are slightly better off, with the BSE Midcap Index down 1.3 percent. But that is not saying much. Unlikely buyers would want to look at second line shares in such rough weather.

10:16 am: James Glassman, Senior Economist, JP Morgan Chase Bank feels that the negative reactions seen in equity markets and various asset classes on possibility of US Federal Reserve tapering its bond purchase programe was a slight exaggeration.

"I suspect this reaction is slightly exaggerated. People had heard Ben Bernanke talk about the possibility of tapering quantitative easing a month ago. We thought that he might pullback from it but he didn't. So, it might be a short-term reaction," he said in an interview to CNBC-TV18

10:11 am: Apollo Tyres , Emami , J&K Bank, Jubilant Foodworks and Wipro are among the stocks that have managed to the weather the selling fury. All five are up aroudn 1 percent.

10:08 am: Finance Minister is holding a meeting with senior officials to discuss the fall in the rupee

10:00 am: Indian equity benchmarks were down sharply in the first hour of trade Thursday after the rupee crashed to a fresh record low on US Federal Reserve chairman Ben Bernanke's remark of scaling down stimulus measures later this year.

The Sensex was down 384.74 points at 18860.96, and the Nifty was down 123.45 points at 5698.80. The rupee today hit a record low of 59.91 to the dollar.

The immediate worry is of foreign institutional investors pulling out of equities, and aggravating the downtrend, and the deeper concern is about the impact that a weak rupee will have on India's current account deficit.

The bigger mayhem was being played out in the Indian bond market, where trading has been halted due to unprecedented selling.

Metal, realty and banking shares were among the biggest losers.

9:50 am Big Gainer: Tourism Finance Corp of India (TFCI) surges 12.81 percent as the company has submitted application with RBI for banking licence. SBI holds 9.19 percent in Tourism Finance Corp while IFCI has 42.50 percent.

9:44 am Bond market alert: Dealers say bond market trading is halted on lower circuit, reports Reuters.

9:40 am FII view: US Federal Reserve Chairman Ben Bernanke's statement that the Fed would start reducing its stimulus measures later this year if the economy is strong enough, has not come as a surprise, says Arvind Sanger of Geosphere Capital Management. But the panicky reaction of bond markets shows that investors had built up leveraged positions in the hope that the flow of easy money would continue in the foreseeable future.

In an interview with CNBC-TV18 , Sanger says the sell-off in the bond markets of emerging economies was due to carry trade being unwound.

Sanger says equities are reacting to the developments in the bond market. If emerging market currencies stabilize, equities will rally again, he says.

He says crude prices are not really dependent on Fed's monetary policy, and have been moving on demand-supply pulls. He sees crude hitting a new high in rupee terms because of the weakness in the Indian currency.

Sanger does not rule out the Nifty falling below 5500 as Indian equities are vulnerable to even marginal FII outflows at this point.

Sanger says the currency movement will influence investments into equity. He advises buying IT and oil & gas shares in a hedged manner.

9:35 am Gainer: Wipro (up 0.8 percent) is the only gainer in the Sensex as media reports suggest that the software has bagged a contract worth around USD 500 million (Rs 2,940 crore) from US-based financial services company Citigroup. The tenure of the contract is five years.

9:27 am Weaklings: ICICI Bank (down 4.11 percent), Hindalco (down 3.84 percent), Tata Steel (down 3.63 percent), Sterlite Industries (down 3.3 percent) and Jindal Steel (down 3 percent) are major losers in the Sensex.

9.25 am Market check: The Sensex is down 360.54 points at 18885.16, while the Nifty slips 116.15 points to 5706.10. About 179 shares have advanced, 689 shares declined, and 39 shares are unchanged. Rupee is nearing the 60/USD mark as it is currently at 59.90/USD.

What Udayan Mukherjee says about the market mayhem?

It is mayhem across the street as the market opens in deep red. The Sensex opens down 255.53 points or at 18990.17, and the Nifty down 74.85 points at 5747.40.

Federal Reserve Chairman Ben Bernanke disappointed markets as it said that it would keep buying USD 85 billion in bonds a month and modestly raised its expectations for GDP growth for 2014, to 3-3.5 percent. Bernanke said if the economy continues to improve the asset-purchasing program could start winding down towards the end of 2013 and wrap up in 2014.

"The crucial FOMC meeting has not worked out for the global markets as the bulls would have hoped. Bernanke's words will have great ramifications for the macro of various countries and certainly for implications on every asset class. Things have moved completely in the wrong direction from what we may have expected or hoped to see. Today it will cause some turbulence in India as well," says CNBC-TV18's managing editor Udayan Mukherjee.

The Indian rupee opened today at a new all time low. It has opened at 59.60 per dollar versus 58.70 Wednesday.

The dollar gained following Bernanke's comments. The euro slipped to 1.32 to the dollar. The dollar index inches back above the 81 mark. The dollar yen was above 96.