The Hindu Business Line : Markets crash

The inflation figures turned out to be a big shocker and stunned the markets. Also, the anticipation of further tightening by the Reserve Bank of India made the market nervous, said Mr Anil Advani, of SBICAP Securities.

Panic selling gripped the market with the fear of more stringent measures expected from the Government, as well.

“Interest sensitive sectors such as banking, realty and term lending institutions will be affected the most by this”, said Mr Vijay L. Bhambwani, of Bhambwani Securities (P) Ltd.

All BSE sectoral indices were in the red – with capital goods that was down by 2.30 per cent, auto (2.44 per cent) , power (2.50 per cent) and realty (4.45 per cent) also hitting their 52-week low. Amongst the worst hit was BSE-Oil & Gas which fell by 5.03 per cent.

The direction of the market is indiscipline and sectors across-the-board will be affected heavily, observed another analyst.

Drastic steps

Such high inflation will require drastic steps from the Government and this will not be positive for the equity markets in the short term, added Mr Manish Sonthalia of Motilal Oswal Financial Services.

“Although the corporate sector seems to be confident of maintaining the good numbers, the operating margins will definitely be affected with such high inflation and in turn impact the earnings in the fourth quarter”, he added.

The heavy fall in the market triggered heavy selling by FIIs as they turned net sellers of close to Rs 1000 crore.

On the other hand, the domestic institutions were net buyers for Rs 564 crore.

“The sentiment will remain weak as markets will continue to be volatile in the near term due to concerns over the macro-economic variables”, said Mr Balasubramaniam of Birla Sun Life Mutual Fund.

Big decline

All but one scrip on the Sensex declined. The biggest losers included Reliance Communication, which was down by 6.65 per cent, Reliance (6.61 per cent), Hindalco (6.37 per cent), Jaiprakash Associates (6.03 per cent), Reliance Infrastructure (4.92 per cent) and Bharti Airtel (4.76 per cent).

While 450 stocks advanced on the BSE, 2247 stocks declined.