Markets crash on global cues

US inflation, hedge fund sales, RBI notification drive fall.

Market players maintained a positive outlook despite the bloodbath today, which saw the Bombay Stock Exchange's sensitive index (Sensex) recording its biggest single-day fall in four months.

The Sensex shed 769.48 points, or 3.84 per cent, to 19,261.35. This is the biggest fall in the index since August 16, when it fell 642.7 points (4.2 per cent).

Today's fall wiped out Rs 3,45,792 crore in market capitalisation.

The broader index of the National Stock Exchange's S&P CNX Nifty dived 270.7 points, or 4.48 per cent, to 5,777, the biggest ever points fall for the index.
The previous biggest fall was on May 18, 2006, when the index fell 246.20 points.

However, buoyant advance tax numbers that came after the close of trading today and the opportunity for "value-buying" led many market players to expect the market to rebound tomorrow as several investors who missed out on the party so long, may see opportunity at lower valuations.

"We maintain our positive view on the Indian market and recommend buying at every correction," said Amitabh Chakraborty, president, equity, of Religare Securities.

He added that the triggers to be watched are Q3 results, the Budget, higher investment allocation for the Indian market and the rate cuts in the US and India. 
 

FELLED
Top 5 Sensex losers
	Dec 17, '07	% Chg*
DLF	944.25	-7.53
NTPC	228.60	-7.30
Tata Steel	823.85	-6.15
HDFC	2877.55	-5.93
ONGC	1166.45	-5.84
Only Sensex gainer
HUL	218.60	0.76
Asian markets on Monday
Description	Net Chg*	% Chg*
Taiwan Taiex	-287.23	-3.54
Hang Seng	-967.06	-3.51
Straits Times	-112.82	-3.25
Kospi	-55.23	-2.91
Jakarta Composite	-75.14	-2.74
Shanghai Composite	-131.15	-2.62
* Change over previous close

Today, however, it was a free fall, with metals, real-estate and oil and gas stocks leading the plunge in tune with the Asian and European markets.

The markets plunged on concerns that rising inflation in the US may bring an end to rate cuts by the Fed.

Year-end selling by foreign institutional investors (FIIs), unwinding of participatory notes (P-notes), derivatives through which foreigners buy stocks on the Indian markets, by hedge funds and profit-booking by the big operators ahead of the trading holidays abroad accentuated the fall.

The Reserve Bank of India's notification after the markets closed on Friday asking banks not to give payment guarantees to FIIs on their purchases also added to the bearish sentiment, said dealers.

FIIs were net sellers for Rs 1,251 crore in the cash segment, their biggest single-day sale this month. FIIs were net sellers for nearly Rs 1,400 crore in the last three trading sessions.

Interestingly, 437 stocks hit the upper circuit while only 237 stocks hit the lower circuit.

Meanwhile, the Dow was 13,224 points at the time of going to press.