The Bombay Stock Exchange’s (BSE’s) Sensitive Index dropped 2.09 per cent On Tuesday, closing at its lowest level since November 10, 2005, after succumbing to a huge selling pressure towards the fag-end of trade. Investors’ sentiments had already come under pressure earlier in the day due to weak performances in the US and other Asian markets.
After opening on a flat note in the morning, the 30-share Sensex started losing ground in the afternoon as large foreign funds offloaded stocks in Indian equities. The Sensex slipped onto shaky ground led by ICICI Bank and Reliance Industries (RIL), losing almost 180 points to settle at 8427.29.
Even the 50-issue Nifty of the National Stock Exchange (NSE) lost over 52 points to close at 2,622.40.
The Sensex, however, is still 730 points – or nearly 9 per cent – above its intra-day low of 7,697 that it had touched on October 27, 2008 after the collapse of global financial giant Lehman Brothers.
“The only reason why the Sensex has not declined too sharply this time is that RIL put up a strong resistance during the past few weeks before news of its big merger with RPL was announced,” said a trader.
According to market experts, the sell-off in the second-half of Tuesday’s session was caused by foreign institutional investors (FIIs) along with a lack of buying support by domestic institutional investors and mutual funds.
Even otherwise, the outlook for the day was already negative as the NYSE and tech-heavy Nasdaq had closed with heavy losses overnight due to fresh concerns building up about large financial institutions, such as America Insurance Group (AIG). The Dow tumbled 299.64, or 4.2 per cent, to 6,763.29. It last closed below 7,000 on May 1, 1997.
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But the Indian markets came under more downward pressure from key benchmark indices in Japan, Singapore, China and Hong Kong which were down by between 0.32 per cent and 2.3 per cent.
“Banks are also going through a correction phase, with uncertainty about the stocks of ICICI Bank, in particular, as investors are waiting for further clarity about its Russian investments,” said vice-president of Ohm Share Brokers, Hiten Sampat.
As per provisional data provided by the NSE, FIIs continued to offload equities and sold shares to the tune of Rs 741.33 crore today, while domestic intuitions supported by pumping in Rs 523 crore only.
Prominent sectors such as bank, oil and gas, and technology lost 2-2.5 per cent on the BSE. Oil and gas heavyweights Reliance Industries and ONGC lost about 2.13 per cent and 2.36 per cent, respectively, while shares of ICICI Bank declined by 2.56 per cent. Tata Power turned out to be the biggest loser of the day with its stock losing 6.41 per cent on the BSE.
“It is difficult to predict a downside for the markets at this moment. But, soon, we will see corrections happening in telecom and refining stocks,” Anand Tandon, head of research at Brics Securities, said.