Sensex slips below 8000

Key indices ended around 2 per cent lower on Wednesday, with dealers attributing the slide to panic selling by retail investors unable to meet margin requirements. With Wednesday's fall, the indices have shed around 10 per cent from their record highs earlier this month.

Equities started off on a sluggish note, tracking the trend in US and other Asian markets. On Tuesday, US markets slumped on worries over rising interest rates and inflation.

The Bombay Stock Exchange's 30-share Sensex closed below the 8000 mark for the first time since September's close at 7971.06, down 151.19 points or 1.86 per cent from Tuesday's close. Intra-day, it touched a high and low of 8084.79 and 7922.89, respectively.

The National Stock Exchange's 50-share Nifty ended at 2412.45, down 55.75 points or 2.3 per cent. Dealers said the rupee's depreciation against the U.S. dollar, partly due to slowdown in foreign fund buying, was prompting other players to book profits.

"We had anticipated the fall as there are a lot of negative factors playing on investor sentiment," said Anita Gandhi, assistant vice president at Arihant Capital Markets.

"The market had touched all time high levels on the back of liquidity infused by foreign funds. However, the rupee's depreciation is leading to outflow of these funds," Gandhi said.

So far this month till Monday, foreign institutional investors have net sold $220.4 million worth of shares. In both August and September they were net buyers of nearly over $900 million worth of shares.

Traded volumes, on both exchanges combined, surged to over Rs 117 billion. On the BSE, more than 10 shares gained for every decline.

"Going by monthly charts, the Sensex is expected to slip further down and trade between 7807, the high on the last day on August, and 7818, the low on the first day of September. If the Sensex manages to close above 7818, then a recovery is seen," said a technical analyst at a local brokerage.

Satyam Computer Services, Mahindra and Mahindra, Dabur India, ICICI Bank, GlaxoSmithKline Pharmaceuticals, Associated Cement Cos, HCL Technologies and Gujarat Ambuja Cements defied the bearish wave to close around 1 per cent higher.

Steel Authority of India, Videsh Sanchar Nigam, Oriental Bank of Commerce, Hindustan Lever, and Dr. Reddy's Laboratories were among the biggest losers, down 4-5 per cent.

In key result announcements on Wednesday, Wipro reported a second quarter net profit slightly better than estimates. However, its forecast for October-December was on expected lines. The stock closed 1.3 per cent down at Rs 368.30.

Gujarat Ambuja Cements' quarterly performance fell short of market expectations.

The company said volume sales were affected due to heavy rains in various parts of the country, while margins were affected by increase in fuel costs.

The stock ended around 1 per cent lower at 65.85 rupees. Reliance Energy also reported better than expected earnings for the second quarter. The company posted a net profit of 1.59 billion rupees against broker estimates of Rs 1.36 billion.

Among second line indices, the CNX Midcap fell 2.8 per cent, while CNX IT and CNX Bank shed close to 2 per cent each. Crompton Greaves, Max India and Sundaram Fasteners bucked the broad trend to end 2-3 per cent higher.