Don’t miss the latest developments in business and finance.

Market rattled by PN factor

Sensex slumps 164 points; it's a correction, says ministry

Image
Our Markets Bureau Mumbai
Last Updated : Feb 06 2013 | 6:00 PM IST
The stock market crashed after putting up a brief fight in early trades yesterday. The finance ministry's next course of action on the issue of hedge funds operating through participatory notes (PN) hung heavy on the stock market, already nervous in the run-up to the general elections.
 
When contacted, senior finance ministry officials said the Securities and Exchange Board of India would take a view on whether any corrective action was necessary on the issue of mandatory disclosure of ownership of PNs. They, however, said the fall in the last two trading sessions could be a correction.
 
Finance Minister Jaswant Singh also refused to comment on the fall in Sensex and said: "it is for the markets to decide".
 
Even a Rs 344 crore inflow from foreign institutional investors today did not improve the sentiment. As a result, the Bombay Stock Exchange (BSE) Sensex lost a good 2.77 per cent (163.92 points) at 5,758.19.
 
Thus, the market has lost a massive Rs 1,28,908 crore (9.76 per cent) in just five trading sessions beginning from the all-time high Sensex level of 6,194.11 on January 14, 2004.
 
Jayesh Shroff, fund manager, BOB Mutual Fund said: "Speculators and big retail investors liquidated short term positions. This is a positive move as stocks are moving out from weaker hands to stronger hands."
 
The Sensex has now lost 306 points in the last two sessions, and 80 points in calendar 2004. The Sensex is 7.7 per cent lower than its life time intra-day high of 6,249.60 in early January.
 
The market value of Sensex scrips has eroded by Rs 51,785 crore (7.7 per cent) while the Nifty has lost Rs 53,140 crore (7.95 per cent) in market cap.
 
The market value of BSE-500, basket has depreciated Rs 1,21,440 crore (9.75 per cent) in the same period. The sharper decline in BSE-500 stocks compared to Sensex and Nifty indicates that there has been large scale selling in mid and small cap stocks in the last five trading days.
 
Declines swamped advances almost 10:1, with the market breadth decisively negative today.
 
Market players indicate that foreign hedge funds were the largest sellers in the markets today. A couple of bank-sponsored mutual funds were said to be selling heavily to prevent their net asset values from crashing further.
 
A section of the market said some domestic brokerages were selling proprietory positions in order to raise cash to meet margin calls.A distinct slowdown in foreign fund inflows has been dogging the markets as the much expected rush of foreign money has still not materialised, 20 days into the new year.
 
Even the strong results posted by top companies failed to shake the markets out of its dejected mood. Most results were summarily dismissed as being "already discounted."
 
The selling pressure was also attributed to the huge outstanding positions of Rs 12,700 crore in the derivative segment with unwinding of open positions by traders also contributing to the nervousness in the market, a market dealer said.
 
The day was marked by volatility and huge selling pressure towards the end of the trading session. Moving in an intra-day range of 234 points, the Sensex touched a high of 5,962.36 and a low of 5,728.32 in intra-day trades today.
 
The broader National Stock Exchange (NSE) S&P CNX Nifty shed 3.63 per cent (68.65 points) to close at 1,824.60. Turnover in the cash segment was Rs 3118.11 crore on the BSE, and Rs 6546.11 crore on the NSE.
 
Index heavyweights took the brunt of the selling tidal wave, with the State Bank of India scrip closing 4.52 per cent lower at Rs 594.45.
 
Reliance Industries was down 3.67 per cent to Rs 551.40 and Hindustan Lever was down 1.67 per cent at Rs 200.15. ONGC lost 9.52 per cent to close at Rs 742.10, Bhel was down 4.50 per cent at Rs 521.55 and HPCL was down 3.79 per cent at Rs 521.55.
 
But after three consecutive days of pressing sales, FIIs were net buyers of Rs 344 crore on January 21, over and above the Rs 27 crore purchases on Monday, the latest data released by the Securities and Exchange Board of India (Sebi) show.
 
Even the strong results posted by top companies failed to shake the markets out of its dejected mood. Most results were summarily dismissed as being "already discounted."
 
The selling pressure was also attributed to the huge outstanding positions of Rs 12,700 crore in the derivative segment with unwinding of open positions by traders also contributing to the nervousness in the market, a market dealer said.
 
The day was marked by volatility and huge selling pressure towards the end of the trading session. Moving in an intra-day range of 234 points, the Sensex touched a high of 5,962.36 and a low of 5,728.32 in intra-day trades today.
 
The broader National Stock Exchange (NSE) S&P CNX Nifty shed 3.63 per cent (68.65 points) to close at 1,824.60. Turnover in the cash segment was Rs 3118.11 crore on the BSE, and Rs 6546.11 crore on the NSE.
 
Index heavyweights took the brunt of the selling tidal wave, with the State Bank of India scrip closing 4.52 per cent lower at Rs 594.45. Reliance Industries was down 3.67 per cent to Rs 551.40 and Hindustan Lever was down 1.67 per cent at Rs 200.15.
 
ONGC lost 9.52 per cent to close at Rs 742.10, Bhel was down 4.50 per cent at Rs 521.55 and HPCL was down 3.79 per cent at Rs 521.55.

 
 

Also Read

First Published: Jan 22 2004 | 12:00 AM IST

Next Story