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Our Bureau

Frontline indices sink to mid-Jan levels

Mumbai , June 8

There was no respite for the stock market on Thursday with frontline indices sinking to mid-January levels on lack of buying support, mutual fund redemptions and tightening global liquidity.

BSE-30 Sensex fell 460.95 points or 4.75 per cent to 9,295.81 points, its lowest close since January 18. With today's fall, the index has lost 1155.55 points in the last four trading sessions.

Mid-cap and small cap stocks continued to bear the brunt of the selling pressure as BSE Mid-Cap and BSE Small Cap indices plunged 8.21 per cent and 8.65 per cent, respectively. As many as 1,012 stocks were locked in the lower circuit on the BSE, while over 130 stocks recorded new all time lows. All 30 stocks on the Sensex and 483 of the BSE 500 stocks ended in the red. On the BSE, 2,205 stocks closed in the negative versus just 171 advances.

NSE's S&P CNX Nifty Index lost 136.1 points or 4.76 per cent to 2,724.35 points.

Dealers said a leading private mutual fund was a big seller on Thursday due to redemptions from corporate houses and high net worth individuals. During the last four sessions, mutual funds were net sellers for Rs 1,002.13 crore whereas foreign funds were net buyers for Rs 1,045.90 crore in the corresponding period.

Foreign brokerages

With over 26 per cent drop from peak levels in less than a month's time, top foreign brokerages have started seeing value at current prices.

"Our base case scenario pegs the current intermediate downtrend to bottom out at 9.4k, with 9.7k-9.8k being a strong support level as well.

"Thereafter, we expect an intermediate rally to commence in the third quarter of 2006, which could take the Sensex to 14.7k by June 2007," Morgan Stanley said in a note to investors.

Dealers said the likely interest rate hike by banks, after RBI raised key short-term rates, would impact consumer spending, and corporate earnings in the coming quarters.

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