Sensex wilts as metals melt

Index slumps 367 points; erodes investor wealth by Rs 94,159 cr.

The slide in global metal prices and profit-booking by funds today triggered the biggest single-day plunge of the Bombay Stock Exchange's 30-share sensitive index (Sensex) since July 17.

The fall, in sync with other Asian markets, eroded investor wealth by Rs 94,159.8 crore.

The Sensex slipped 367.96 points, or 3.09 per cent, to 11,505.60 and the broad-based S&P CNX Nifty Index lost 105.3 points to 3,366.15.

"The market was looking for some reason for a correction. The global meltdown in commodity prices and the decline in Asian markets provided the trigger for today's correction. The Sensex, which is close to previous highs, was also becoming heavy at the top," said Nirmal Jain, managing director, India Infoline.

The market showed signs of strength on opening, with the Sensex inching closer to 12,000 by advancing to 11,971.60 points, before the selling pressure started.

The market has been on an upswing for seven consecutive weeks. A similar, seven-week bull run happened only once in the past "" from July-end to September in 2001.

"The correction could continue for three or four days. However, I do not think this is a crash, as a 2.5-3 per cent fall can always be absorbed by the market," said Sashi Bhushan, head of the Private Client Group at IL&FS Investsmart.

Reflecting the global fall in metal prices, the BSE Metals Index had the sharpest fall today, of 5.05 per cent.

The BSE Small Cap Index lost 3.4 per cent to close at 5,829.30, the Midcap Index lost 3.4 per cent to close at 4,871.46 and the Auto Index lost 3.67 per cent, closing at 5,016.08.

Only one Sensex stock (Hero Honda, up by 1.26 per cent to Rs 745.25) ended in the positive. Similarly, only three among the BSE-100 stocks gained during the day.

Reliance Energy (down 5.94 per cent to Rs 459.10), Tata Motors (down 5.56 per cent to Rs 848.05), Tata Steel (down 5.35 per cent to Rs 496.70), Hindalco Industries (down 5.17 per cent to Rs 174.40) and Cipla (down 4.63 per cent to Rs 245) were the biggest losers among the index stocks.

Among other stocks, Bombay Dyeing was down 8.1 per cent, Century Textile 6.4 per cent and LML, which has been referred to the Board for Industrial and Financial Reconstruction, 19.8 per cent.

In terms of market breadth, 1,971 stocks ended in the red, compared with just 551 advancing stocks. However, the market turnover was higher than the recent average of Rs 39,530.98 crore. Foreign funds, according to provisional figures, were net buyers for a marginal Rs 19 crore on Monday.

"The markets are likely to be range-bound in the region of 11,000-12,000. Investors should stay away from metal stocks, which are vulnerable to global fluctuations," said India Infoline's Jain.

Commodity crunch

Commodities fell sharply on Monday, led by sharp declines in gold, oil and copper as investors weighed quick profits against longer-term prospects.

While oil prices dropped by more than $1 on Monday after OPEC agreed to keep pumping at high rates to ensure world consumers were well-supplied, copper's losses neared 3 per cent.

US light crude for October delivery dropped $1.19 to $65.06 a barrel by 1552 GMT, rebounding slightly from an intra-day low of $64.85, the lowest since March 28. Gold tumbled more than 2 per cent to under $600 an ounce for the first time since the end of June.