Sensex crashes 285 pts at close on DMK pullout, 2G charges

Shares nosedived on Tuesday as the DMK party's decision to pull out of the ruling UPA rattled investors, overshadowing the Reserve Bank's move earlier in the day to cut the benchmark repo rate by 25 basis points .

The 30-share BSE Sensex crashed 285.10 points to end the day at 19008.10, and the 50-share Nifty fell 89.30 points to finish at 5745.95.

This is the largest single day fall in the Sensex since February 28.

The latest political development has raised the spectre of an early general election, and has cast doubts on the recent economic reforms initiated the by the government.

"In the near term, we expect the government to shift its focus to managing coalition partners," said a note by brokerage house Ambit.

"Some reform legislation will still be passed, but with the general elections due by May 2014, we expect political uncertainty to resurface in H2 FY14 (year ending March 2014) and politics to trump economics," the note said.

Realty, capital goods, metal and banking shares were among the worst hit, as investors flocked to the safety of defensive sectors like pharma and fast moving consumer goods.

Adding to the bearish mood was the downtrend in global markets, and the 2G trial court summoning Bharti Airtel founder Sunil Mittal in the additional spectrum allocation case.

The equity market took yet another turn for the worse in late afternoon trade after 2G trial court took cognizance of chargesheet against Bharti and Vodafone.

The Sensex fell 262.58 points and the Nifty slipped 84.35 points at 5750.90.

The Bhart stock slipped 5% after Sunil Mittal, chairman and MD of Bharti Cellular was summoned by 2G trial court. The trial court overseeing the additional spectrum case has named four persons and three companies as accused.

Top losers on the Sensex were BHEL, Bharti, Jindal Steel, Sterlite, and Mahindra and Mahindra, all down between 3.5 percent and 4.5 percent. DLF and Reliance Infra were the major losers on the Nifty.

Earlier, the market had collapsed after DMK pulled out of the ruling UPA government . The DMK ministers were likely to resign in next 24 hours to protest against alleged war crimes in Sri Lanka. The DMK has five ministers in the Union Cabinet.

Hectic politicking in New Delhi eclipsed the Reserve Bank of India's repo rate cut by 25 basis points. The Sensex and Nifty tanked over a percent amid high volumes as the DMK withdrew support to ruling UPA government . This led to wild swings on the D-Street, which momentarily shaved of some of its losses, but resumed its journey downwards in late afternoon trade. The Sensex was down 273.61 points at 19019.59, and the Nifty fell 88.90 points at 5746.35.

Top losers on the BSE Sensex were Jindal Steel (down 4.5 percent), BHEL (down 3.9 percent), Hero MotoCorp (down 3.3 percent), ONGC (down 2.9 percent), Sterlite Industries (down 2.9 percent).

Manappuram Finance continued to skid 13.9 percent at Rs 29.80 on the BSE.

Meanwhile, the biggest gainers on the Sensex included GAIL, Sun Pharma, Bajaj Auto, ITC and Maruti Suzuki.

There was complete mayhem in the market as DMK snapped ties with the ruling UPA government but Finance Minister P Chidambaram assured that the Government has absolute majority in the House,  which soothed the nervous market. At 12 PM, the Sensex recovered from day's low to trade down 230.93 points at 19062.27 and the Nifty was down 75.90 points or 1.30% at 5759.35.

Oil and gas, autos, metals, realty and banking stocks were badly hammered on the street. ONGC (down 5.1 percent),  Jindal  Steel, Coal India,, BHEL and Hero MotoCorp were the biggest losers on the Sensex.

Meanwhile, the major gainers on the Sensex were Sun Pharma, GAIL and Wipro.

The market collapsed as DMK pulled out of the ruling UPA government . DMK ministers are likely to resign soon to protest against alleged war crimes in Sri Lanka. The DMK has five ministers in the Union Cabinet.

The Sensex crashed 240 points at 19052.51 while the Nifty slipped 75.20 points at 5760.05. However, despite a repo rate cut of 25 basis points (bps) by the Reserve Bank of India in its monetary policy review, the market was not fazed. The bond market was also flat.

What may enthuse the market is the central bank's statement that it will keep liquidity intact through open market operations (OMO). ''Headroom for monetary easing is limited,'' it added.

The big gainers on the Sensex were GAIL, Sun Pharma, ICICI Bank and Bajaj Auto adding around 1 percent each. Autos and pharma stocks were lending support to the market.

BGR Energy gained 2.6 percent on reports that L&T in its joint venture with Mitsubishi heavy industries is evaluating acquisition of power generating equipment manufacturing units set up jointly by BGR Energy Systems and Hitachi Power Europe. The L&T management told CNBC-TV18 that there is no truth to this buyout news.

Liberty Shoes added 4.4 percent. The board has approved organisational restructuring of the company. On the losing side were ONGC (down 3 percent), Coal India (2.5 percent), BHEL (1.9 percent).

Manapurram General Finance dragged 13.6 percent, down Rs 4.70 at Rs 29.90 on the BSE. Brokerage Ambit highlighted that due to gold prices falling further by 5 percent over the last 2 months, the quantum of interest income reversal could increase vs earlier guidance given by the management. Moreover, on some portions of the loan portfolio originated in Nov-Dec 2011 the company seems to have to stop booking income during the current quarter as the collateral value associated with these loans would be less than principal plus accrued interest.

SAIL skid 3.2 percent as the EGoM will meet today to decide the floor price for the offer-for-sale (OFS). Bankers suggest that the OFS price could be at a discount at Rs 60/share. Macquarie has upgraded SAIL to neutral with a target price unchanged at Rs 82. It says that sail is on the verge of completion of its mega capex plan of USD 13 bn, benefits of which will start rolling from FY15 onwards . This could test investor patience as there can be delays but it could also subject investors to a stress test if iron ore prices fall sharply.

After a weak closing on Monday, benchmarks opened stable ahead of Reserve Bank of India's mid-quarter monetary policy review, suggesting the street is expecting a 25 bps rate cut . Post the Cyprus shock, global markets have also been trading mixed. The Sensex was up 32.57 points at 19325.77 while the Nifty added 8.35 points or at 5843.60.

Technology and banking were lending support to the market. Top gainers on the Sensex were Bajaj Auto, ICICI Bank, Maruti Suzuki and GAIL adding over 1 percent each.

The midcap index gained around 0.2 percent while the lead gainers included Balrampur Chini, Bank of Maharashtra and Orchid Chemcial.

However, on the losing side were Coal India, TCS, BHEL and Dr Reddy's lab slipping just about 1 percent each.

Manappuram Finance lost 7.95 percent, Steel Authority of India dipped 3.77 percent while Jet Airways fell 1 percent.