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Our Bureau

Mumbai, Oct. 8

Sensex saw its biggest decline in over one-and-a-half months, dropping by 1.59 per cent or 282 points on Monday. The broader S&P CNX Nifty dropped by 1.9 per cent. A combination of factors combined to tug down the market, said brokers. Positive US jobs data released on Friday painted the picture of a stronger economy there, lessening the likelihood of another interest rate cut by the US Fed.

“With that, hopes of a domestic rate cut in India dimmed too, driving down banking, realty and other interest-sensitive stocks,” said the Head of Research at a leading brokerage.

“Higher inflation figures for the week ended September 22 too, brought down stocks,” he said.

Inflation for that week was 3.42 per cent, up from 3.23 per cent in the earlier week, (until which inflation had been steadily declining for some time).

On the domestic front, the Congress leader, Ms Sonia Gandhi’s statement criticising opponents of the US-India nuclear agreement brought a tinge of wariness in the markets.

“There is a fear of further rift between the Congress and the Left parties (which support the government),” said a broker.

In addition, the markets have risen so much since mid-September that a correction was inevitable, said the head of another broking house. “Markets too take pauses to breathe while they climb,” he said.

Indications of a stronger US economy had the reverse effect on the IT sector, said brokers. In fact, among the BSE sector specific indices, only BSE IT gained, rising by 0.63 per cent on Friday.

All the other indices dropped, led by the BSE PSU which tanked 3.79 per cent; BSE Metals (3.77 per cent) and BSE Realty (3.61 per cent).

The decline in the markets was as broad as the advance in the markets had been narrow last week. On BSE, 2,263 stocks (81 per cent) declined. It may be recalled that market watchers had been commenting on the narrowing breadth of the rally last week. Among the Sensex stocks 23 of the 30 scrips declined.

Among the top losers were Tata Steel, down by 5.29 per cent, ACC, Ranbaxy, Reliance Energy (top among the blazing gainers in the recent market rally), NTPC, Hindalco, and SBI. Provisional data on NSE showed that FII were still net buyers for Rs 1,459.51 crore; domestic institutions were net sellers for Rs. 142.68 crore. The retail segment’s net selling was for Rs 482.28 crore, showed the BSE Web site.

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