Bear hug shaves 176 pts off Sensex

Index loses over 1,000 points in three weeks.

The stock markets continued their losing spree, as foreign fund withdrawals continued to depress prices as well as sentiment.

After several months of good rollover in the derivatives segments, the positions this month have not been as strong, clearly indicating the nervousness in the market.

The Sensex dipped 176 points today to close at 7,798.20, down 2.2 per cent. With this fall, the Sensex has lost over 1000 points from its all-time high of 8,821.84 reached about three weeks ago.

Currently, the Sensex trades at a price-earnings ratio of 15:35 compared with a peak of 18:15.

Dealers attributed the fall to continued selling by foreign institutions.

So far in October, FIIs have sold stocks worth Rs 2,452 crore and Rs 2,393 crore in the cash market and the futures segment, respectively.

However, domestic mutual funds have been providing buying support with net purchases of Rs 2,278 crore till date, though this is significantly lower than their purchases in September (Rs 3,233 crore). In 2005 so far, FIIs have made net purchases of Rs 34,909 crore in the cash market.

The 50-share Nifty ended the day at 2,352.90, down 2.3 per cent or 55.60 points.

The market breadth was overwhelmingly negative with three shares falling for every stock rising among the frontline scrips. Of the 30 Sensex shares, seven ended higher, while 23 fell.

Profit-taking amid lack of buying support triggered the fall, said dealers.

Technicals analysts said 7,838 was a crucial support and since it was broken, one could expect further weakness.

"The next logical support will be 7,537, which was the take-off level for the precipitous rise to the all-time high of 8,821," said VK Sharma, head of research, Anagram Broking.

Banking stocks, which looked firm after the announcement of the credit policy, were the biggest losers today. The BSE Bankex suffered the steepest fall among sectoral indices, declining 4.30 per cent.

Pharma and capital good stocks were relatively better off with modest losses.

Reliance Industries ended at 750.30, down 1.7 per cent despite excellent quarterly performance numbers. Among prominent gainers were Glaxo Pharma, Hero Honda and HDFC.

There was bloodbath in telecom stocks. VSNL lost 10 per cent, while Bharti declined 7.5 per cent as both, according to analysts, dialled wrong quarterly numbers.

Indiabulls, in the news for all the wrong reasons over the past few days, lost 8 per cent today despite a company announcement that it was considering a share buyback. Yesterday, Goldman Sachs had sold 13 lakh shares as reported in the block deals of the BSE.