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Sensex fails to sustain early gains

Special Correspondent

MUMBAI: The woes of stock markets are not yet over. After a spurt in the opening on Thursday, the Bombay Stock Exchange 30-share sensitive index (Sensex) failed to sustain the recovery and closed with a loss of 372.33 points or 2.12 per cent at 17221.74. Continuing the bearish sentiment on bourses, metal, power and capital goods stocks led the fall.

In highly volatile trading the Sensex lost more than 1000 points in intra-day. After opening on a positive note, the Sensex touched a high of 18185 on sustained buying in index heavy weights. It touched the day’s low of 17070. However, as selling gained momentum, the market slipped deep into the red to touch the day’s low of 17070. “But, the rise in European markets helped the Sensex erase partial losses towards the close as value buying emerged in index pivotal stocks,” said Sharekhan, a leading institutional broker. The broad-based 50-share NSE Nifty too slipped by 170 points to close at 5033.

Further, bears hammered down midcap and smallcap stocks. The BSE midcap index lost 251.41 points or 3.23 per cent at 7537.90 and the smallcap index 411.38 points or 3.95 per cent.

Among the sectoral indices, metal lost 5.70 per cent at 14220.68, power 5.32 per cent at 3733.47, consumer goods 4.87 per cent at 16382.48, realty 4.41 per cent at 10141.82, oil and gas 3.21 per cent at 10497.95, bankex 1.38 per cent at 10582.88 and IT lost 1.20 per cent at 3587.78.

RBI move awaited

Investors are now looking forward to a decision by the Reserve Bank of India on its response to a massive interest rate cut in the U.S. It is believed that a decision on a rate cut would be taken at the RBI’s monetary policy review meeting on January 29.

“A rate cut seems likely sooner rather than later as the RBI does not have much headroom and cannot remain insulated from the international markets. A rate cut also looks probable given the rising differential between the Indian and international rates. Another reason for a reduction in interest rates is that without a rate cut, the rupee would strengthen further which would be a negative for the export sector,” said Mr. Sharekhan. If any rate cut will be announced, it would help financial companies.

No pay-in, pay-out

Meanwhile, the Bombay Stock Exchange informed that in view of the proposed bank strike on Friday (January 25), there will be no pay-in and pay-out activities for settlements of cash and derivatives segment on that day. However, trading on Friday will continue as usual.

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