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Our Bureau

Mumbai , May 10

THE impact of the weak Asian market coupled with the uncertainty over the poll outcome pushed the Indian financial market over the edge today.

While the benchmark stock indices shed nearly 2 per cent, rupee and government securities also lost significant ground.

The Sensex opened weak and lost 127 points to touch 5501 but subsequently gained ground and closed at 5555, shedding over two per cent. Similarly, at the National Stock Exchange, the S&P CNX Nifty slid to 1754 intra-day but rose marginally to close at 1769, a loss of 1.96 per cent.

In the currency market, the strengthening of the dollar overseas coupled with domestic demand, led to the value of the rupee falling by 38 paise against the dollar, to end the day above the Rs 45 mark. The rupee closed at 45.0450/0650; these levels were last tested in end March.

Internationally, the euro fell over 2 per cent against the dollar while the Japanese yen touched a nine-month low against it. Government securities prices also fell by 30-40 paise intra-day but gained later in the day. Sentiment in the market was weak with US interest rates expected to firm up and the political verdict in India still unclear.

The primary cause of market jitters today were the exit polls conducted by TV channels that predicted that the BJP-led NDA is expected to garner 245-265 seats, while Congress and its allies would bag 190-210 seats, indicating that the leading party would not get a clear majority.

Markets around the world also tumbled today, based on indications that the interest rates in US are set to increase by 25 basis points soon. The rising oil prices and concerns over the cooling down of the Chinese economy contributed significantly to the pessimism in the global markets.

Oil and gas and auto sectors have been the worst affected today. "Pharmaceutical sector withstood the market well today. However, oil and gas may weaken further," said Mr Jaideep Goswami, Head of Research, HDFC Securities Ltd.

While they concede that markets will continue to be choppy and "event based" in the short term, brokers and investors feel confident about the markets bouncing back in the medium to long term.

"Our past research indicates that the markets usually gain around 11 per cent in three months after the elections. If the leading party wins 250-270 seats, we see the Sensex hovering in the 5500-6200 and if they win more than 270 seats, the market would move to 6200-7000 range," said Mr Andrew Holland, Executive Vice-President - Research, DSP Merrill Lynch Ltd.

Even though brokers say that global inflows and outflows will determine the market in the short term, market participants would be on the edge till May 14 when there would be clarity on the future government.

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