Spooked by the heightened fears about Greek economy, the benchmark BSE Sensex dropped by more than 600 points in early trade today, but managed to recoup some loses in later half on selective buying in the beaten-down counters to settle the day lower by 167 points at 27,645.15.
Greece shut down its banking system, ordering lenders to stay closed for six days starting today to avoid a run on the country's banks. The steps, a fateful climax to five years of debt crisis, puts Greece closer than it ever has been to an exit from the euro zone.
"Indices sharply opened lower in line with global partners on account of Greece debt payment intensifying worries," said Gaurav Jain, Director of Hem Securities.
Falling for the second straight day, Sensex resumed lower and dropped by 602.65 points or 2.17 per cent to 27,209.19, but recovered afterwards to 27,695.32 before ending at 27,645.15, showing a loss of 166.69 points or 0.60 per cent.
"...Indian benchmarks bounced back on Finance Secretary Rajiv Mehrishi statement that fallout from Greece would not have a direct impact on India," Jain added.
Worried that the Greek crisis may trigger capital outflows, Mehrishi said the government is in touch with the RBI which will take necessary steps to deal with the issue.
The situation in Greece has no direct impact on India, he said but added that there may be some indirect effect via Europe on capital inflows and outflows here.
The broader NSE Nifty also after dipping below the 8,200-point mark, recovered most of losses to close 62.70 points or 0.75 per cent down at 8,318.40.
Weakness in rupee against dollar that depreciated by 26 paise to Rs 63.90 (intra-day) too prompted investors to trim positions, traders said.
"Indian markets' recovery today could be tested on Tuesday as we get to know about the outcome of India-Mauritius joint working group's meeting on double tax avoidance," said Anand James, Co Head Technical Research Desk, Geojit BNP Paribas.
