The market extended losses for the second continuous session this week amid a falling rupee, rising crude oil prices, widening current account deficit and global trade tensions which dampened investor sentiment. While the Sensex closed 509 points or 1.34% lower at 37,413, Nifty fell 150 points or 1.32% to 11,287 level.
The Sensex has seen over 1% fall in the second straight session today for first time since February 2016. On Monday, the Sensex closed 467 points or 1.22% lower at 37,922, the Nifty fell 151 points or 1.30% to 11,438 level.
Tata Steel (3.46%), PowerGrid (3.21%) and Hero MotoCorp (3.09%) were the top Sensex losers. Of 30 Sensex stocks, 25 closed lower.
Coal India (1.73%) was the top Sensex gainer followed by NTPC and Infosys rising 0.36% and 0.31%, respectively.
India's current account deficit (CAD) widened to $15.8 billion, which is around 2.4 per cent of the country's Gross Domestic Product (GDP), for the quarter ended June as compared with $15 billion in the same quarter a year before, according to data announced on Friday. The weakening rupee against the US dollar and high crude oil prices in the international market led to a rise in current account deficit in the first quarter.
The rupee sinking to a fresh record low of 72.74 also gave an upper hand to the bears. The currency fell 29 paise in late afternoon trade on rising dollar as crude oil prices went past the $78 a barrel mark.
"The market will continue to remain under pressure for some time, likely until the end of the week, as it is already over-stretched," RK Gupta, managing director at Taurus Asset Management told Reuters.
"There is fear that rising crude prices, weakening of the rupee will cause inflation to go up and in that case, RBI (Reserve Bank of India) is bound to raise interest rates by 25 bps (basis points) in the October meeting."
Some investors may choose to book profit before the second-quarter advance tax payment deadline, and markets may also see correction due to impending state elections in four states in November, Gupta said.
While the BSE mid cap index fell 1.36% or 221 points to 16006.49, the BSE small cap index lost 228 points to 16,488 level.
Market breadth was negative with 875 stocks closing higher compared with 1,840 ending lower on the BSE. 152 stocks were unchanged.
All 19 sectoral indices ended in the red with BSE consumer durables index losing 2.47% or 510 points to 20, 144.04 level.
Major global stock markets were mostly lower on Tuesday after Wall Street's gains as investors waited for a new US tariff hike in a trade battle with China.
The trade tensions between the US and China kept global markets in volatile zone. The Trump administration was due to announce a decision shortly on whether to go ahead with 25 percent tariffs on $200 billion of Chinese imports in a dispute over Beijing's technology policy. The two sides already have raised duties on $50 billion of each other's goods.
In early trading, Germany's DAX lost 0.1 percent to 11,971.94 and London's FTSE 100 fell 0.3 percent to 7,258.47. France's CAC 40 was little-changed at 5,273.25. On Monday, the CAC 40 added 0.3 percent, the DAX rose 0.2 percent and the FTSE 100 was unchanged. On Wall Street, futures for the Standard & Poor's 500 index and Dow Jones industrial average were little-changed.
The Shanghai Composite Index retreated 0.2 percent to 2,664.80 and Hong Kong's Hang Seng lost 0.7 percent to 26,422.55. Tokyo's Nikkei 225 advanced 1.3 percent to 22,664.69 while Seoul's Kospi declined 0.2 percent to 2,283.20. Sydney's S&P-ASX 200 added 0.6 percent to 6,179.70 and India's Sensex shed 0.4 percent to 37,764.80. Benchmarks in Taiwan and New Zealand gained while Southeast Asian markets declined.