Sensex plunges below 9,500

Inflation, interest rate worries trigger 334-pt fall.

After re-writing history on Friday when it recorded the biggest single-day gain of 515 points, the Sensex on Monday saw a dramatic reversal, shedding 334 points, as bears swung back into action once.

Weak global markets and absence of positive triggers rendered the market extremely weak, dealers said.

The Sensex plunged to a low of 9,428 during intra-day trade, before ending the session at 9,476.15. The 50-share Nifty hit a high of 2,878 and a low of 2,762 before finally settling at 2,776.85, a net loss of 89.45 points.

The market on Monday saw yet another session of heightened volatility. Though the market opened up marginally, it lost ground as trading proceeded and fell below Friday's close.

There was some strong resistance around early afternoon and the bulls appeared set to seize control, but a fresh bout of selling dampened hopes of a revival. The market finally ended the session on a highly negative note.

According to Vikas Khemani of Edelweiss Securities, "On Monday, the market fell owing to intense selling pressure across the board. Going forward, the market will remain very volatile with 2-3 per cent up or down movement daily. Investors need to watch the data flow from global markets like Japanese interest rates."

According to provisional figures from the NSE, FIIs purchased net Rs 84.32 crore of stocks on Monday.

The Securities and Exchange Board of India (Sebi) data suggests that mutual funds are increasing their cash component to prepare for possible redemption pressure. Their cumulative sales in equities in the first few days of June 2006 has reached Rs 1,411 crore.

The market breadth was negative with losers outnumbering the gainers in the ratio 2.1 to 1. On the BSE, of the 2,425 stocks traded on Monday, 1,599 finished in the red, 773 held on to gains and 53 closed unchanged from their previous close.

The volume on the bourses was much lower with the BSE recording a turnover of Rs 2,752.70 crore and the NSE recording a turnover of Rs 5,553.47 crore in the cash segment and Rs 20,801.73 crore in the derivatives segment.