The Hindu : Business : Sensex takes a plunge

Online edition of India's National Newspaper
Friday, Sep 23, 2005

Business

Business

Sensex takes a plunge

Special Correspondent

Reports of income tax raids on brokers trigger selling

Sharp rise in funds routed through PNs Biggest single day fall Declines outnumber gains

ALL LOST: A stock trader looks at a trading chart as prices fell like ninepins on Thursday. Almost 95 per cent of stocks traded during the day fell on account of panic selling on fears of income-tax raids. — Photo: Shashi Ashiwal

MUMBAI: The Bombay Stock Exchange sensitive index crashed by 265.50 points on Thursday, after record gains in the last several days, as investors sold shares of bluest of the blue-chip companies. This is the biggest single day fall of all major indices, Sensex and Nifty, since May 17, 2004. All the 30 Sensex stocks and 50 Nifty stocks ended in the red.

The benchmark BSE 30-share sensitive index (Sensex) closed lower by 265.50 points or 3.13 per cent at 8221.64, a sharp fall since Tuesday when the index reached a record high of 8500.28. It touched an intra-day high of 8519.60 and a low of 8186.13. The Sensex lost Rs. 35,000 crore in market capitalisation. The NSE Nifty lost 90.80 points to close at 2476.50.

The breadth of the market was totally one-sided, with declining stocks outnumbering advancing stocks. Of the 2,597 stocks traded on the BSE, 2,503 stocks declined, 86 advanced and eight stocks ended unchanged.

The report of raids on several brokers across the country by income-tax officials precipitated the fall and the market plunged deep into the red by mid-noon. Earlier, there were also reports that the Finance Ministry along with the Securities and Exchange Board of India (SEBI) launched an investigation into the market boom, which has seen the Sensex gain more than 27 per cent this year.

It is also reported that funds routed through Participatory Notes (PNs) have gone up sharply and it reached an alarming level of around 42 per cent of the $8.3 billion invested by foreign institutional investors (FIIs) in the Indian market. PNs are a derivative instrument issued by the FIIs to their overseas clients, who are not registered with Indian regulators.

The BSE small-cap index fell by 7.62 per cent to 5579 and the BSE mid-cap index by 5.60 per cent at 3991. All the sectoral indices were also down. Hindalco, Reliance Energy, VSNL, Satyam and Zee Telefilm were the biggest index losers. Wipro and Bharti Tel-Ventures also ended lower.

Bharti Tele crashed by 4.39 per cent to Rs. 335 and Reliance Industries by 3.53 per cent to Rs. 755. Grasim, BHEL, HDFC, HDFC Bank, HLL, Infosys, ONGC, NTPC, SBI, Tata Motors, TCS, Tata Power and Tata Steel were the prominent losers.

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