Sensex dips 258 pts on FII selling

Rumours of an impending political crisis and an upward revision of the growth rate of the Japanese economy deflated share prices in the Indian markets on Friday, with foreign institutional investors (FIIs) selling equity worth Rs 337 crore. All indices shed between one per cent and four per cent, with institutional favourite large-caps declining the most.

The Sensex was down 2.4 per cent, Nifty 2.55 per cent, and the BSE mid-cap and small-cap indices slipped 2 and 1.7 per cent, respectively. The Sensex closed at 10,509, down 258 points, while the Nifty ended the day at 3,076, down nearly 80 points.

"The market had an optimistic start, but lost ground later because of rumours that all was not well with the ruling coalition," said a dealer. "However, most of the problems started when news of the revision of the Japanese GDP growth rates trickled in during the afternoon."

In the morning, the Japanese cabinet had raised its official forecast for growth of the country's economy during 2005-06 from 1.9 per cent to 2.1 per cent.

Benchmark indices for the metal and oil and gas sectors declined the most on the BSE on Friday, down by more than 3 per cent, and were followed by IT, automobile and FMCG, all of which fell by around two and a half per cent.

Forty-six of the 50 stocks on the Nifty index declined. Prominent among the losers were telecom stocks VSNL and MTNL, followed by heavyweights such as Reliance and SAIL. Reliance Industries fell 4.6 per cent to Rs 1,031 on firm global crude oil prices.