Poor rains spook markets; Nifty loses 100 points to end sub 4500

The sell-off continued on the street for the second straight day on the back of monsoon concerns, fall in commodities' prices in the international markets, weak global cues and the dollar index touching the 78 mark.

All sectoral indices ended in the red. Sharp decline in rate sensitives, infrastructure and FMCG stocks pushed the Nifty below the 4,500 mark at closing. Most worrying factor for the market was monsoon; the rainfall was 64% below the normal level and India's crops were at risk after 2 dry weeks. Only 7 of India's 36 weather zones received rains in the past week. Around 42% of area under major crops is irrigated and the rest is dependent on rain.

The MET department's HR Hathwar, in an interview with CNBC-TV18 said that the monsoon situation right now was not very encouraging. Northwest has faced rainfall deficiency. "The monsoons there are 40% below normal." He further added that an overall improvement should not be expected for another few days.

The monsoon has been the big worrisome factor for auto sector since yesterday, as it affected the most. Vibhav Kapoor of IL&FS said, "For a lot of auto companies, margins could come under pressure if global commodity prices keep on going up and you may not see these margins going ahead maybe from Q3 onwards. The monsoons could play a very important role as far as this sector is concerned because a lot of the demand has been coming from the rural areas. If you have a really bad monsoon then that could really impact our topline growth."

The BSE Auto Index tanked nearly 3.9% in the trade today, as Bajaj Auto lost 7%. M&M and Maruti Suzuki (largest car maker in India) plunged over 5%. Apollo Tyres, MRF, Ashok Leyland, Exide Industries, Amtek Auto, Hero Honda and Bharat Forge were down 2-4%. Tata Motors fell 0.9%.

The 30-share BSE Sensex tumbled 353.79 points or 2.28%, to settle at 15,160.24 and the 50-share NSE Nifty shut shop at 4481.40, down 2.27% or 104.10 points. Both equity benchmarks fell 3.3% each this week. The broader indices also declined around 2% each. The advance:decline ratio ended at 1:4.