Domestic stock indices yesterday wilted under the onslaught of heavy selling by foreign institutional investors (FIIs).
The 30-scrip Bombay Stock Exchange sensex, after opening firm at 3,029.10, fell 112.49 points, or 3.73 per cent, to close at 2,896.14 points, which was also the day's low.
The S&P CNX Nifty fell 26.30 points to close at 847.95, while the broad-based S&P CNX 500 index fell by 17.44 points to close at 587.32.
FIIs made net sales worth Rs 32.41 crore yesterday, while domestic funds made net purchases amounting to Rs 50.97 crore.
Towards the end of the trading session, domestic institutions, led by the Unit Trust of India, made modest purchases in frontline stocks. This, however, failed to revive market sentiment.
Market players feel that sustained buying by domestic players alone is unlikely to keep the market steady for a long time. "When this demand dries up, the fall in market indices is going to be even steeper," said BSE broker Maulik Sharedalal.
Sources say two large US-based funds have been pressing sales in various frontline scrips, including those belonging to the software sector.
The ACC scrip dipped below Rs 1,000 during intra-day trading at the BSE, but closed higher at Rs 1,001.75.
The market also witnessed extreme volatility in some pivotals, including ITC, which shot up to an intra-day high of Rs 715, before closing at Rs 685.70 on the BSE. According to sources, there were signs of recovery in some East Asian economies, which might result in foreign investors withdrawing funds from India in favour of these economies.
"Currencies of some of these countries has appreciated and some international investible funds might reach these markets. If currencies as well as stock prices appreciate, these funds would gain on both accounts," commented a director with a Hong Kong-based brokerage firm.
The US-64 fiasco seems to be bothering market players who, as a result, are comfortable holding cash rather than carrying a position.
