Indian shares fell for the fourth straight session in volatile trade on Monday, as investors abroad continued their flight to safety on renewed concerns over Europe’s debt crisis and fears of a double-dip recession in the United States.
The Bombay Stock Exchange (BSE) benchmark, the Sensex, opened 46 points higher at the day’s high and fell to an intra-day low of 15,801. It recovered nearly 250 points from here to close down 0.69 per cent, or 110.96 points, at 16,051.
At the National Stock Exchange (NSE), the 50-share NSE Nifty index ended 0.7 per cent lower at 4,835.40. The exchange’s volatility index, India VIX, a gauge of traders’ perception of near-term risks in the market based on options prices, increased 0.77 per cent to 35.43.
Foreign Institutional Investors (FIIs) sold shares worth Rs 1,083.8 crore on Monday, provisional data on the BSE website showed. Domestic institutional investors were buyers to the tune of Rs 575.21 crore.
Investors reacted cautiously to European policymakers’ latest efforts to stop the fallout from the region’s debt crisis, while a sell-off in the commodity markets hit shares in Indian metals and mining companies. Index heavyweight Reliance Industries and capital goods stocks were also among the main losers for the session.
“We expect the market to remain volatile till there is an end to the Europe problem. That decision is getting postponed and the uncertainty is going up by the day,” said Neeraj Dewan, director at Quantum Securities. “We are just tracking the global markets. Since Europe and US futures turned positive, there was short-covering,” he added.
World stocks came off their lows on speculation the European Central Bank might cut interest rates to help the economy.
However, metal and mining shares were among the worst-hit after copper futures in Shanghai and London crashed, as fears of a Greek default caused panic about a possible sharp slowdown in global demand for industrial metals.
Back home, non-ferrous metal producers Hindalco and Sterlite Industries dropped close to near two-year lows and ended down 3.9 per cent and 4.3 per cent, respectively. State-run Coal India, the world's largest miner lost 5.2 per cent.
Energy major Reliance Industries, which has the heaviest weightage on the main index, extended its previous session's losses, as investors continued to worry over the company's woes in its oil and gas business. Gas output from its key blocks off India's east coast has been slowing, while the Comptroller and Auditor General recently criticized it over violations in the development of the natural gas field.
The stock fell 1.5 per cent to Rs 759.2, taking total losses in 2011 to more than 28 per cent.
"Buyers are choosing to stay away, but this is actually the time when long-term funds should be coming into the market," said D D Sharma, senior vice-president at Anand Rathi Securities.
Shares in software exporters were among the few gainers in the session, as the rupee dropped further from Friday's close. Tata Consultancy Services, Infosys and Wipro, which get most of their revenues from the United States and Europe, rose between 0.2 per cent to 0.7 per cent.
In the broader markets, 1,122 declines led 323 advances on a moderate volume of 564.6 million shares.
