Sensex dips 116 on panic selling

Rs 56,193 crore m-cap wiped out in 4 days

Shouriespeak led to panic selling in last hour of trade yesterday.

The government's statement that it will identify the reasons for the decline in share prices of state-owned companies in the divestment pool led to the massive selling pressure.

Disinvestment candidate and index heavyweight Oil and Natural Gas Corporation was the biggest loser in the Bombay Stock Exchange (BSE) Sensex basket, falling 6.02 per cent to close the day at Rs 670.25.

At this price, its market capitalisation has fallen below Rs 1,00,000 crore. Dredging Corporation of India tumbled 12.84 per cent to Rs 460, IPCL 1.95 per cent to Rs 186.05, IBP 2.50 per cent to Rs 667 and Gail India 5.4 per cent to Rs 196.

Public sector stocks came under intense selling pressure: Bhel lost 5.03 per cent to close at Rs 557.10, Hindustan Petroleum 4.28 per cent at Rs 445.25 and Mahanagar Telephone Nigam Ltd 3.62 per cent at Rs 134.55.

As a result, the BSE PSU index fell 3.71 per cent to 3,550.49 points, even as the Sensex lost over 116 points (2 per cent) at 5,618.15. With this fall, the BSE has lost Rs 56,193 crore in market capitalisation in the last four trading sessions since the current raft of public offers hit the market.

Twenty-five of the 30 Sensex stocks ended the day with losses with heavyweight ITC down 3.82 per cent at Rs 1,071.70, State Bank of India down 3.31 per cent at Rs 587.05, Reliance Industries down 2.13 per cent at Rs 554.30 and Hindustan Lever down 0.80 per cent at Rs 174.50.

Tata Motors was down 5.33 per cent at Rs 497, Hero Honda Motor 2.98 per cent at Rs 498.10 and Bajaj Auto 0.26 per cent at Rs 904.45. Tata Steel was down 3.87 per cent at Rs 426.55.

The Wipro scrip fell 2.27 per cent to Rs 1,430, Satyam Computer 2.58 per cent to Rs 294.20 and Infosys Technologies 1.64 per cent to Rs 4,957.80.

Losers swamped gainers 1,132:518 on the BSE in a relatively brisk turnover of Rs 2,479.19 crore on the BSE and Rs 5,240.12 crore on the NSE.

Market sources said with just one day to go before the expiry of the February contracts in the futures and options segment, the market was jumpy since morning, especially as the undertone has been weak on concerns of liquidity being drained out of the secondary market owing to the slew of public offers.

"Selling pressure intensified in the last one hour's trading following reports that the government will look into the reasons for the poor response to the public issues," said a dealer at a local brokerage,

"The Sensex is likely to go down by 150-200 points in the next few days, but I expect it to pick up after that. There is a lot of interest from foreign investors and this should lift the market," said Gul Techchandani, chief investment officer, Sun F&C MF.

The BSE capital goods index fell 3.09 per cent, while the Bankex fell 1.81 per cent. The IT sector index was down 1.27 per cent and the FMCG sector index 1.81 per cent.