Sensex loses 696 points on heavy selling across sectors; realty, metal worst hit.
Indian stocks fell the most in Asia in more than two weeks on concerns that earnings may worsen as the global financial crisis has already started forcing companies to cut output and defer expansion plans.
The Bombay Stock Exchange (BSE) benchmark index, Sensex, closed at 9,839.69 points, down 6.61 per cent or 696.47 points, the biggest drop since October 24, 2008. The broad-based Nifty-50 closed at 2,938.65 points, down 6.66 per cent or 209.6 points.
Selling was seen across sectors with all BSE sectoral indices ending the day in the red and the 30 Sensex stocks in negative zone.
Foreign institutional investors (FIIs) on Tuesday sold equities worth Rs 370.95 crore while domestic institutional investors bought equities worth Rs 229.12 crore in on Tuesday’s market, as per provisional data from the Bombay Stock Exchange.
“Despite the stimulus package announced by the Chinese government, investors remained pessimistic about economic growth, which reflected in Asian markets on Tuesday. For Nifty, the major support is at 2,855, below which we may see further selling. The best strategy is to reduce long and create hedge positions,” said Alex Mathew, Head, Research Centre, Geojit Financial Services. In tune with the world markets, the Sensex yesterday advanced 571.87 points, or 5.7 per cent, to close at 10,536.16.
Marketmen said that there was a lot of profit-taking in the market since morning. Yesterday’s rally was driven mainly by buying from long-only funds. They expect the Sensex to remain in the range of 9,300 to 11,500 points. The breadth, indicating overall health of the market, was poor on BSE with 1,770 shares falling as compared with 773 that advanced. Sixty-eight shares were unchanged.
Metal shares reversed yesterday’s sharp gains on renewed gloom over the global economy. The BSE Metal index fell 8.42 per cent to 5,233.77 and was the second worst-hit among the BSE sectoral indices. Dealers said that production cuts announced by bluechip companies have been playing on the sentiment of the market and the earnings in the next two quarters would reveal a drop in net profits.
Stocks fell in Asia and Europe as evidence of a weakening Chinese economy, feeble data from Australia and Britain, and gloomy US corporate news reinforced fears of a prolonged global recession. In Europe, key benchmark indices in UK, Germany and France were down between 1.72 per cent and 2.51 per cent.
In Asia, key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan were down between 2.06 per cent and 4.77 per cent. Russian regulators halted trading on one of the country’s two main stock indices after it fell 6.5 per cent, dragged down by commodity and banking shares.
Meanwhile, trading in US index futures indicated that the Dow Jones Industrial Average (DJIA) fell 1.4 per cent, while Nasdaq-100 Index futures fell 1.3 per cent, hinting at a weak opening for the US markets.
