Sensex tanks 463 points

Rs 1,33,960 cr investors' wealth eroded; all Sensex stocks in the red.

Stock markets on Monday crumbled under pressure from a slump in metal prices and weakness in emerging markets. The Sensex lost 463 points and ended trade at 11,822, down by 3.77 per cent from Friday's close.

The Nifty created a record with a 4.03 per cent fall, down 147 points to close at 3,503. The day saw the biggest intra-day fall for the Sensex and the Nifty since May 17, 2004. The fall shaved off Rs 1,33,960 crore worth of investors' wealth.

Though the bloodbath on the bourses was most visible in the metal and commodities sectors on Monday, there was selling pressure across the board.

The Bombay Stock Exchange's metal index lost 10.68 per cent, with Sterlite Industries, Sesa Goa and Hindalco Industries dragging it down significantly.

Sterlite industries lost 14.83 per cent to close at Rs. 514.45, Sesa Goa slipped Rs. 177.20 to end trade at Rs. 1290.50 and Hindalco lost 13.34 per cent on selling pressure, closing at Rs. 210.15.

All the stocks on the Sensex and the Nifty closed in the red. Heavyweights like ONGC, Reliance Industries, ITC and Hindustan Lever lost heavily. The market breadth was extremely negative. Of the 2,624 stocks traded, 1,899 declined, 684 advanced and 41 remained unchanged.

Foreign institutional investors were net sellers for three trading sessions in a row. On Monday, they sold equities worth Rs 2,444 crore and were net sellers to the tune of Rs 812 crore.

With negative cues coming in from the Asian markets, trading on the domestic exchanges are expected to be bearish tomorrow.

Asian stock markets fell sharply on Monday with Japan's Nikkei losing 114.87 points, a fallout of a two-day slide on Wall Street and a falling greenback. Even European stocks tumbled. Almost all emerging markets were down.

"There is a possibility of a further correction in the market. We are looking at a 10 per cent drop in the market from its highest level. Valuations had run out of reasonable levels and once this correction is over, we can re-look at stocks in terms of their fundamentals and their price earnings ratio," said N Sethuram, chief investment officer, SBI Mutual Fund.

With Monday's fall, the Sensex has shed 6.7 per cent (849 points) from its lifetime peak in just three trading sessions. The Sensex has lost 790 points, or over 6.25 per cent, in three trading sessions, shaving off Rs 1,98,317 crore of investors' wealth.

"This is part of a correction which the system has to undergo from time to time. We will have cycles of volatility within a secular upturn. There will be cycles of volatility but the secular trend of equities in India is positive in the long-term," said Uday Kotak, executive vice-chairman and managing director, Kotak Mahindra group.

Market analysts pointed out that with liquidity from FIIs being the primary driver of this market, Indian bourses were going to be increasingly susceptible to trends in international markets.

FIBs reacted globally and the Indian markets could be vulnerable even if there were no domestic triggers, they said.

"FII inflows can reduce as investors will start moving away from risk now. If Wall Street is down on Monday and the European markets also close weak, Tuesday could mean another fall in our markets. I am looking at a correction of 15 per cent from the highest level in the index in the short-term," said Andrew Holland, executive vice-president, DSP Merrill Lynch.