Sensex drops 175 pts as dollars head home

Stretched valuations, rupee worries feed carnage.

The stock market plunged more than 2 per cent today in tune with the trend in other Asian markets as foreign investors, worried about a weakening rupee and stretched share valuations, sold heavily.

The BSE Sensex lost 175.17 points to end at 8,201.73, its lowest closing in the past month. The market breadth was largely negative as losers outnumbered gainers nearly 8: 1. The Nifty also ended 2.08 per cent lower at 2,484.40.

Though the market has lost 3.4 per cent during the week, it is still up more than 24 per cent since January. But foreign institutional investors (FIIs) have turned net sellers in India as also in the rest of Asia. Yesterday, FIIs sold shares worth Rs 400 crore in the cash segment.

Dealers in institutional broking firms said a number of foreign funds were booking profits. Apart from concerns on stock valuations and the macroeconomic numbers, foreign funds were also gradually monetising paper profits as their performance fee "" usually paid out during the end of the year""is given only from booked profits.

Marketmen are hopeful that the markets are close to bottoming out and the Sensex should find support around 8,000.

Of the 30 Sensex shares, all but three were down. Some frontline stocks that bucked the trend were National Aluminium, Tata Steel, Steel Authority of India, HDFC and Cipla. Cement majors Gujarat Ambuja Cements and ACC were among the top losers in the Nifty, down 7 per cent and 5 per cent, respectively, after ACC announced lower than expected quarterly numbers. ICICI Bank, which yesterday announced plans to raise $1.6 billion capital, fell 3.5 per cent.

UTI Bank rose 1.7 per cent to Rs 258.20 after it said its July-September net profit more than doubled.

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SHOCK THERAPY

FIIs sell over Rs 3,142 crore in October
After pushing the Sensex to new highs till some time ago, foreign institutional investors (FIIs) are now turning the tables.

In October, FIIs were sellers to the tune of Rs 3,142 crore in the cash and futures segments. In the cash market, FIIs' net investments stand at a negative Rs 964 crore. In addition, net sales in index and stock futures were Rs 2,178 crore.

One in four traded stocks at 3-month low
Close to a quarter of the actively traded stocks have declined to new three-month lows this week, triggered by profit booking by foreign institutional investors.

Of the 2,525 stocks traded, as many as 617 touched lows, wiping out Rs 1,01,010 crore worth of investor wealth in four trading days""from Rs 22,51,839 crore on October 7 to Rs 21,50,829 crore on October 14. The sharpest fall was on Friday, when Rs 51,000 crore worth of investors' wealth was eroded.