The Hindu Business Line : Sensex drops below 14,000

Mumbai, Aug. 21 Political uncertainties at home coupled with the continuing global liquidity worries took its toll on the domestic bourses on Tuesday.

For over two weeks, the stock markets were bowled by the sub-prime credit crisis, but now concerns on the stability of the Congress-led coalition Government due to the disagreement of the Left allies on the Indo-US nuclear deal have created panic in the investors’ minds.

Global liquidity worries added to the already losing market, pulling it down further. News that hedge fund Solent had gone bust only added further fuel to the fire, said dealers.

There was heavy profit-booking and selling across sectors as the benchmark index Sensex lost 438.44 points to settle below the 14,000-mark at 13,989.11.

The NSE S&P CNX Nifty tumbled 3.19 per cent at 4,074.90 .

“The political uncertainty and Left party’s stand lent instability to the stock markets which caused panic in the investors’ minds,” said Mr Arpit Agrawal, Head – Research, Arihant Capital Markets Ltd.

Mid and small-cap stocks, which had escaped the selling brunt also found a place in the sell list of investors. The BSE mid-cap index dipped 3.29 per cent, while the small-cap index fell 3.75 per cent.

Incidentally, the stock markets taking a cue from yesterday’s positive movement had started on a positive note with the Sensex opening up 84.64 points. However, the early gains were quickly wiped out and the index failed to regain the momentum.

FIIs continued their selling spree turning net sellers at Rs 648.93 crore, as per the provisional figures on the NSE. In contrast to the previous trading sessions, retail investors were net sellers to the tune of Rs 57.05 crore. “The derivative figures are also signalling a bearish trend in the markets as the gap between the cash and futures increased from around 20 points in the morning to 40 points at the close of trade,” said Mr Gurudatta Dhanokar, Derivative Strategist, Almondz Global Securities Ltd. All the sectoral indices ended in the red with realty stocks losing the gains made in the past days. The BSE Realty index plunged 4.59 per cent to close at 7,173.66 points. Banking stocks which made sharp gains yesterday reacting to the Fed’s decision to cut interest rates corrected sharply today with the BSE Bankex index losing 4.41 per cent.

None of the 30 Sensex stocks gained. The biggest loser was SBI, down 5.59 per cent at Rs 1,463.75, followed by Wipro down 4.83 per cent at Rs 446.80.