Massive selling by foreign institutional investors under redemption pressure hammered key domestic stock indices down yesterday. The 30-scrip Bombay Stock Exchange (BSE) sensitive index crashed 90.22 points to breach the psychological barrier of 3700, closing at 3,633.18 points. Meanwhile, the National Stock Exchange 50 (Nifty) slid 28.35 points to close at 1,045, down 28.35 points from its previous close of 1,073.35 points.
Stock prices fell across the board, with key pivotals being singled out for punishment. Marketmen said the fall was aggravated by the domestic financial institutions failure to support the market at lower levels. With many of the foreign funds facing redemptions, FIIs are forced to sell in the market.
Further, there is a lot of concern about the weakening of the rupee, which has also precipitated the fall, commented a dealer with a leading brokerage. Other market observers said the political uncertainty at the Centre also contributed to the slump.
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The redemption pressure was a result of another dismal day for global markets. In London, the FTSE 100 index fell over 1.5 per cent on opening, rattled by a four per cent fall in Hong Kongs Hang Seng index. The Hang Seng eventually closed down 396 points at 9,607. The mood in London was hardly improved by a 2.73 per cent fall in Tokyos Nikkei index, brokers said.
All eyes were on the US markets, but the Dow Jones industrial average lost more than 50 points shortly after opening yesterday. Around 9:34 a m EST, the Dow was down 50.10 points at 7,508.63, which activated the NYSEs limits on program trading.