Sensex down on selloff worries

After two days of gains, investors became cautious and booked profits ahead of the formation of the Congress-led government. The BSE Sensex closed at 4,932.11, down by 74 points.

The index opened at 5,048.17 and hit a high of 5,073.70 during intra-day trades. The Sensex was unable to hold on to its gains in face of the profit-booking during the day.

The National Stock Exchange's (NSE) broader Nifty index also closed lower by 24 points at 1,540.60.

Predictably, the prices of public sector company shares and those of state-owned banks spearheaded the fall. The price of the ONGC scrip went down 3 per cent to close at Rs 682.60, while Gail ended marginally up at Rs 170.35.

Bhel also went down 7.84 per cent to close at Rs 463.40, while Hindustan Petroleum closed 1.10 per cent lower at Rs 323.10.

State Bank of India went down to Rs 514.85, down by 2 per cent, Bank of India went down 1.11 per cent to Rs 62.10, while Corporation Bank dipped 0.33 per cent to close at Rs 287.25.

The BSE PSU index went down by 34.50 points, while the Bankex was down by 22.67 points.

Index heavyweights Reliance (Rs 442.80), ITC (Rs 889.05) and Infosys (Rs 4925.60) closed lower. Tata Steel went up by 3.8 per cent to close at Rs 327 with its fourth quarter net profit registering a 34 per cent rise over net profit in the same quarter in the previous year.

However, the broader market was more buoyant, with 925 gainers versus 660 losers. The volumes in the market were also high, with 12.3 crore shares changing hands.

The head of broking at a leading brokerage house pointed out the weakness in the Asian markets were also making the Indian markets jittery.

The violence in West Asia has brought in its wake apprehensions about oil supplies and their impact on the prices of crude.

"The uncertainty over the economic policies of the new government is also impelling investors to book profits as fast as they can, rather than hold on to their positions," he said.

The uncertainties are specifically related to disinvestment and subsidies.

Investors are also not taking any fresh positions unless there is more clarity on the new government's formation. On Wednesday, foreign institutional investors (FIIs) sold shares worth Rs 49.9 crore while mutual funds sold Rs 41.60 crore worth of equities.

In May so far, the FIIs have been net sellers to the tune of Rs 2993.40 crore and mutual funds net purchasers to the tune of Rs 1311.50 crore.