Sensex sinks 305 points on tighter P-Note norms, hawkish Fed

Mumbai: Falling for a second straight day, the benchmark BSE Sensex Thursday plummeted by 305 points to hit over two-week low of 25,399.72 on fears that regulator Sebi will tighten P-Notes rules and speculations that the US Federal Reserve may raise interest rate in June.

Moreover, the broader NSE Nifty broke below the crucial 7,800-level. Among other factors, the rupee depreciated by 37 paise to 67.34 against the dollar during the day.

The 30-share Sensex after remaining in the positive zone briefly at the outset, slipped into the red and touched a low of 25,351.99 before winding up 304.89 points or 1.19 percent, to close at 25,399.72, its weakest closing since May 6.

The 50-issue NSE cracked below the 7,800-mark by falling 86.75 points or 1.10 percent to 7,783.40. Intra-day, it shuttled between 7,766.80 and 7,876.20.

In election result, BJP was set to create history in Assam by ousting Congress, which also lost Kerala to the Left front while incumbents AIADMK and Trinamool Congress retained power in Tamil Nadu and West Bengal.

Meanwhile, Sebi chief U K Sinha said the regulator is in discussions with the industry on tightening Know Your Client (KYC) mechanism for participatory notes (P-Notes) and will take a final decision on it soon.

Among Sensex shares, Adani Ports and Special Economic Zone emerged as the session's biggest loser by plunging 6.14 percent to Rs 171.85 after Moody's said it has revised the outlook on company to 'negative' from 'stable'.

Other major losers were SBI, L&T, HDFC, GAIL, ITC, Cipla, Axis Bank, ONGC, RIL, Bharti Airtel, Coal India, Hindustan Unilever, M&M, Bajaj Auto, Tata Steel, Asian Paint and NTPC.

Bucking the trend, shares of Lupin rose 1.43 percent to Rs 655.80 after the company posted 47.5 percent growth in its consolidated net profit at Rs 807.1 crore.

Sectorwise, the BSE capital goods index suffered the most by losing 2.38 percent followed by infra (2.01 percent), FMCG (1.74 percent), metal (1.61 percent), PSU (1.55 percent), oil&gas (1.22 percent), banking (1.20 percent), consumer durables (1.04 percent) and power (1.03 percent).

Selling pressure also dragged down the BSE mid-cap index by 1.12 percent and small-cap by 1.01 percent.

World stocks edged lower after minutes from the Federal Reserve's April policy meeting signalled the central bank could raise rates as soon as next month if data supported the case that the American economy is getting stronger.

Asian markets finished lower while European indexes were also down in their early trade.