The Hindu : Business : Sensex tumbles 292 points

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Wednesday, Jul 01, 2009
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Sensex tumbles 292 points

Fears of liquidity crunch spark selling

MUMBAI: The Bombay Stock Exchange sensitive index, Sensex, plunged by 292 points to 14493.84 on Tuesday on across-the-board selling, sparked by slowdown in infrastructure growth as well as fears of a liquidity crunch in the market. The Sensex closed at 14785.74 on Monday.

Analysts said the fund raising plans of corporates through institutional placement induced fears that such share sales will suck liquidity out of the market.

Touching an intra-day high of 14907.48 at the outset, the Sensex gradually moved downwards and settled at 14493.84, a net fall of 291.90 points. Many companies have announced plans to raise funds by way of share sales to institutional investors, taking advantage of a strong surge in stock prices after the general elections. Investors heavily sold shares of realty companies due to the sector’s slower growth.

As a result, the BSE realty index tumbled 256.88 points or 7.42 per cent.

Stocks of Jaiprakash Associates, the biggest builder of dams, declined 7.22 per cent, and DLF and Unitech, the two largest developers, lost 8.05 per cent and 6.68 per cent, respectively, after six companies said they plan to sell shares to institutional investors.

Metal sector index was the second-worst performer, losing 3.42 per cent to 10830.90, as all the 15 participant stocks ended with losses following reports of weak trends in global markets.

The power index fell by 3.19 per cent to 2842.34 with Suzlon Energy losing 11.44 per cent to Rs. 103.70.

Rupee gains 20 paise

The rupee turned stronger by 20 paise to end at 47.90/91 against the dollar on Tuesday. It closed at 48.11 on Monday. The U.S. currency weakened against major world currencies in Asian trade.

The rupee touched a two-week trading high of 47.80 but failed to sustain elevated levels. In active trading at the interbank foreign exchange market, the domestic currency moved in a range of 47.80 and 48.06 intra-day. — PTI

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