Indian stock markets fell for the second day on Tuesday, tracking weak global trends and continued selling pressure due to a disappointing interim budget.
The 30-share Sensex, which opened with a negative gap of about 92 points in the morning, continued its downward slide throughout the trading session. It briefly fell below the 9000-mark during the day and touched a low of 8994.34. Finally, the benchmark index closed at 9,035.00, about 270 points, or 2.91 per cent lower than its previous close.
Among the sectoral indices on the Bombay Stock Exchange (BSE), realty, consumer durable and banking indices suffered the most, declining 4-5 per cent each.
The National Stock Exchange's Nifty also shed 78 points, or 2.74 per cent, to close at 2,770.50. Nifty futures expiring on February 26 brought fresh open interest and ended with a discount of nearly 21 points to the spot Nifty, indicating fresh built-up of short positions.
Experts believe that there are no immediate triggers for the stock market till the general elections are over. The general elections are likely to be held in April-May.
"Factors like worsening global situation, end of budget-related euphoria and new risk in terms of impending general elections are dragging the markets down," said Jigar Shah, senior vice-president and head of research at KIM ENG Securities India.
According to Shah, the negative trend is likely to continue till the verdict of the general elections is known. He also sees a possibility of the market re-testing its October lows in the interim period.
Foreign brokerage HSBC's equity strategists Vivek Misra and Garry Evans believe that the outcome of the election and a turnaround in earnings would be the likely drivers for the market recovery.
"The markets will struggle to progress and will remain range-bound, at least until some strong drivers appear in the second half of FY10," they wrote in a note to clients.
The market breadth was extremely negative on Tuesday. Out of the total 2,504 stocks traded on the BSE, only 682 stocks advanced from their previous close, while 1,722 stocks declined.
"There were a lot of expectations built around the interim budget. However, it has disappointed the market and positions are not getting unwound," said Anita Gandhi, head of institutional sales at Arihant Capital Markets.
As per the provisional figures available on the BSE website, foreign institutional investors (FIIs) net sold Indian shares worth Rs 462.21 crore on Tuesday. They had pulled out Rs 283.40 crore from the market on Monday.
Other Asian markets fell on Tuesday on concerns of worsening global economic scenario. Benchmark indexes in Hong Kong, Singapore, China and South Korea ended lower with losses ranging between 2 and 4 per cent. Major European markets were also trading 2-3 per cent lower at the time of going to press.