Index plunges 674 pts on heavy selling by FIIs.
The BSE Sensex underperformed major global indices today as the Indian benchmark fell 5.87 per cent, or 674 points, to close at 10,809.
The broader index, S&P CNX Nifty of the National Stock Exchange (NSE), fell 5.12 per cent, or 180 points, to end the day at 3,338.
Heavy selling by foreign institutional investors (FIIs) snapped the two-day rally in domestic stocks. As per provisional figures, FIIs sold stocks worth Rs 1,030 crore in the cash market, while domestic funds made net purchases of Rs 669 crore today.
| THAT SINKING FEELING, AGAIN | ||
| Index | Fall (in points) | Fall (in per cent) |
| BSE 30 | 674.28 | 5.87 |
| Hang Seng | 834.58 | 4.96 |
| Straits Times | 68.92 | 3.24 |
| FTSE 100 | 185.16 | 4.21 |
| CAC 40 | 127.13 | 3.50 |
Market analysts said the short-term outlook for equity markets remained bearish. Vice president at Karvy Stock Broking, Ambareesh Baliga said, “Any market bounce-back will give rise to profit booking and finally result in a sharp fall until FII outflows slow down. In the past three years, Indian markets received nearly $34 billion FII inflows, of which nearly $11 billion has been pulled out this year. However, a significant amount of the ‘hot money’ is yet to go out of the system as the world goes into recession.”
According to Deepak Sawhney, research head at Networth Stock Broking, the Sensex may fall below 9,700 if India’s growth slows down significantly. “Analysis of the past three biggest crashes in Indian markets during the Harshad Mehta scam and the dotcom bust reveals that bourses have not declined below 50-55 per cent from their peaks. This time too, Indian benchmarks have declined by over 50 per cent and they may not fall more from here,” he said.
The fall in markets today was led by a sharp decline in Reliance stocks. The most weighted index stock, Reliance Industries (RIL) was down 6.20 per cent at Rs 1,519. Reliance Communications fell 12.11 per cent at Rs 235 and Reliance Infrastructure slipped 12.11 per cent at Rs 555. Among others, Tata Steel, Sterlite Industries and ICICI Bank fell between 7 and 11 per cent.
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The RBI’s extension of the special short-term lending (repo) facility for banks to aid mutual funds, which have been witnessing redemption pressure, failed to avert the slide.
The BSE consumer goods index fell the most by 8.88 per cent. The overall market breadth looked poor as 79.74 per cent, or 2,117, stocks declined, while only 18.79 per cent, or 499, scrips made advances.
Asian stocks too discontinued their two-day gaining stint with key indices in the region dropping between 2 and 4 per cent amid fears of prolonged slowdown in global markets, a PTI report from Beijing said.
Asian bourses followed cues from American markets, which failed to hold on to their initial gains and closed in the red.