Global cues continue to batter markets

Volatility ruled the roost today, India's volatility index hit an all-time high of 34.31 as global uncertainty weighed on investor’s mind.

The US markets had crashed in trades on Monday following the S&P downgrade. The Dow Jones Industrial Average slumped 5.5% to 10,810. The Nasdaq plunged almost 7% to 2,358, and the S&P index cracked 6.7% at 1,119.

Mirroring the losses in the US markets, Asia too was deep into red at the opening bell. The major markets like Hang Seng tumbled nearly 8%, and Seoul Composite collapsed almost 10% in early trades. Nikkei and Straits Times too dropped around 5% each, while Shanghai Composite declined around 3.5%.

Little wonder, that our markets too opened on a dismal note. The Sensex started the day 472 points lower at 16,518, and soon touched a low of 16,432. The NSE Nifty broke the 5,000-mark, for the first time since June 2010, in early trades to touch a low of 4,946 - down 3.4%.

However, renewed buying interest mainly in select rate sensitive stocks - from the auto and realty space - led to a smart recovery. At one point, the recovery turned out to be broad space, as the European markets opened on a flat to positive note, and the US futures too indicated a sharp recovery on the Dow Jones futures.

The buying momentum was so strong, that the Sensex rallied all the way to a high of 17,135 - up over 700 points from the day's low. The Nifty too touched a high of 5,167, up 4.5%. However, the recovery was quite short-lived, thanks to the European markets.

The major European markets, - FTSE 100, CAC 40 and DAX plunged almost 3-5% each after the slightly optimistic start. Losses on European bourses widened due to selling in banking and commodity shares ahead of the US Federal Reserve Policy expected later today. The Dow futures also changed course, and traded back into the negative terrian.

This led to a fresh round of selling, with the Sensex falling nearly 300 points into red at one point. The volatile markets eventually ended in red, albiet off the day's low. The Sensex finally settled with a loss 132 points at 16,858. In the process, the index has declined 1,456 points in the last six consecutive days. The NSE Nifty declined 46 points at 5,073.

For the third day running, IT stocks were the major draggers. Infosys and TCS together accounter for a loss of 82 points on the Sensex. Reliance Industries, ICICI Bank, Tata Steel and Tata Motors were the other major draggers.

The markets losses could have been higher had it not been for stocks like ITC, HDFC and Mahindra & Mahindra, which collectively contributed 82 points to the Sensex.

In terms of per cent age, Tata's trio of TCS, Tata Motors and Tata Steel were the major losers, all down over 4% each. Cipla, Infosys, Sun Pharma and Wipro were the other major losers.

On the other hand, Mahindra & Mahindra soared nearly 5%. DLF, ITC, Jaiprakash Associates, Bajaj Auto and HDFC were the other major gainers, up around 2% each.

The BSE IT index plunged 3.5% to 5,041. Apart from the three IT majors - HCL Technologies, MphasiS and Patni Computer also ended with steep losses.

The BSE Metal and the Health care indices ended with losses of 2.5% each. Tata Steel, National Aluminium, JSW Steel, Coal India, NMDC, Sesa Goa, Bhushan Steel and Hindalco were the top losers in the metal space. While, Strides Arcolab, Aurobindo Pharma, Glenmark Pharma, Ranbaxy, Dr.Reddy's. Cipla and IPCA Labs were the major losers among the pharma stocks.

Given the broad-based sell-off, the market breadth remained unfavorable yet again. Nearly 70% of the BSE traded stocks ended lower, while 28% stocks advanced today.