FIIs trigger Nifty's plunge

FIIs, along with market operators, delivered a body blow to the market on Monday with the S&P CNX Nifty dropping to a low of 3,798 from the previous day's close of 3,962, down 164 points.

The Nifty recovered thereafter to close at 3,849.50, thanks to low level buying in Bharti Airtel, Tata Steel, Reliance Communications, BHEL, HDFC Bank and VSNL. These stocks recovered between 4 and 8 per cent from the day's low level.

The FIIs had triggered a sell-off last Friday by short-selling 27,300 Nifty contracts valued at Rs 1,080 crore. On Monday, the FIIs on Monday sold Nifty futures and stock futures worth Rs 1,384 crore.

The December series of Nifty was sold heavily in the market with the Nifty open interest increasing further by 44.85 lakh shares to 32.57 million shares.

Though the FIIs were net sellers in the F&O segment, the provisional figures show that they bought worth Rs 334 crore in the cash segment. Rahul Rege, business head (non-institutional) at BRICS Securities, said the market is anticipating a correction after the failure to sustain the recent momentum in the indices last week. "I think, Monday's fall was an over-reaction. Further, investors are yet to recover from the May-June fall," he said.

According to him, the market cannot be compared to the May levels. "I don't see the market in an overly leveraged situation," Rege added.

An analyst at a local brokerage firm said he expected support to come around 3,830 levels for the Nifty. The market witnessed a substantial build-up at the next support level of Nifty 3800 with open interest in 3800 put increasing by almost 15 per cent or by 2.47 lakh shares.