The Hindu : Business : Sensex drops further on selling

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Wednesday, Oct 08, 2008
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Business

Sensex drops further on selling

RBI, SEBI measures fail to boost morale of investors

MUMBAI: In a day marked with high volatility, the Bombay Stock Exchange benchmark Sensex on Tuesday shed another 106 points as funds continued their selling-spree amid the melting in global stock markets.

Taking positive cues from Reserve Bank of India’s CRR (cash reserve ratio) rate cut by 50 basis points on Monday, the BSE barometer started higher by a handsome over 379 points and had regained the 12000-level, which it lost on Monday on massive selling for the first time in two years.

However, funds continued their selling, pulling down the key index to 11695.24, a loss of 106.46 points. With selling continuing unabated, the Sensex even dipped to a low of 11501.85 during the day.

As the market experienced choppy trade throughout the day, the wide-based National Stock Exchange index Nifty moved between 3732.65 and 3537 before closing at 3606.60, a marginal gain of 4.25 points. Trading activity was mixed as initial gains were on the back of the RBI cutting CRR, which would infuse Rs. 20,000 crore into the system. But reports of melting global stock markets quickly reversed the trend.

Stocks in Europe and Asia declined on concerns that financial firms may need more capital than $700 billion, announced in the bailout package by the U.S. The downtrend overshadowed speculation that central banks around the world may reduce interest rates.

The MSCI Asia Pacific Index fell one per cent, while the MSCI Emerging Markets Index lost 0.5 per cent. Futures on the Standard & Poor’s 500 Index retreated less than 0.1 per cent.

The U.S. Dow Jones Industrial Average index dipped below the 10000-level, first time in four years and Japan’s Nikkie to five years’ low as investors turned panic sellers.

Capital goods, IT, banking and realty sectors were the major losers, while the market received support from oil and gas, PSU and power segment stocks.

The capital goods index suffered the most among all sectoral indices, by falling 376.41 points, or 3.96 per cent to 9118.52. Segment major L&T, Bharat Bijlee, Punj Lloyd, Reliance Industrial Infra and Siemens declined.

IT sector index dropped 88.95 points, or 3.04 per cent, at 2840.30 with blue chip Infosys falling by Rs. 13.70 to Rs. 1,304.10 and Satyam Computer by Rs. 15.25 to Rs. 279.05.

Banking index fell by 132.75 points, or 2.15 per cent, to 6039.25. ICICI Bank, HDFC Bank, Kotak Bank and State Bank of India fell sharply.

Realty index fell by 58.27 points to 2941.72, FMCG index by 36.90 points to 2053.68, healthcare index by 60.55 points to 3427.52, metal by 102.62 points to 7534.03, consumer durable by 17.28 points to 2552.32 and auto index by 14.44 points to 3511.96.

As selling pressure spread over a wide-front, the smallcap index lost 110.54 points at 4976.39 and midcap index by 87.07 points at 4257.16. — PTI

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