Mumbai: The BSE Sensex ran up more losses for the second straight day slipping 231 points its biggest single-day fall in over two weeks to end below the 26,000-mark after Fed chair Janet Yellen hinted at a rate hike.
In prepared remarks, Yellen at an appearance before an economic group on Wednesday, said she is "looking forward" to first interest rate hike in nearly a decade, sparking worries that emerging markets may see capital flight.
What compounded the worries was a monthly PMI survey, which showed that services sector output stagnated in November after four straight months of expansion. The reading fell to 50.1 in November, from an eight-month high of 53.2 in October, as per the business survey conducted by Markit and Nikkei.
The BSE Sensex hit a low of 25,857.35 before settling at 25,886.62, a fall of 231.23, or 0.89 per cent its biggest single-day drop since November 18.
The gauge had lost 51.56 points yesterday.
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The 50-share NSE Nifty closed lower by 67.20 points, or 0.85 per cent, at 7,864.15.
"Market took cues from global peers... Investors are sensing that the era of near-zero interest rates is coming to an end after the Fed chairman expressed her confidence about the US economy," said Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services Ltd. "In addition, concerns over today's ECB policy meet also influenced the market direction."
ONGC tanked the most, with a fall of 2.65 per cent, followed by Lupin and BHEL.
Vedanta, ITC and M&M were down by up to 2.23 per cent.
Stocks of IT and auto saw sell-off as incessant rains in Chennai and other parts of Tamil Nadu hit operations hard. Overall, 25 fell among 30-share Sensex constituents.
Sector-wise, BSE FMCG suffered the most plunging 1.48 per cent, followed by consumer durables, metal and PSU.
The small-cap index fell 0.50 per cent while the mid-cap index shed 0.42 per cent as investors reduced their bets. Asian markets showed a mixed trend at the close while Europe was trading higher in opening trade on expectations that ECB will ramp up its stimulus programme.
Foreign portfolio investors (FPIs) after remaining net sellers on Indian markets for several sessions bought shares worth a net Rs 60.61 crore yesterday, provisional data by stock exchanges showed.
