The Hindu Business Line : Sensex sheds 440 pts on bailout blues

Weak cues
Weak Asian cues resulted in weak opening for Indian markets
FIIs were net sellers for Rs 643.04 crore
Except BSE-Auto, all other sectoral indices ended in the red

Our Bureau

Mumbai, Sept. 26 Domestic stocks plunged on Friday, this time with news of the US Government’s $700-billion bail out plan for the troubled financial institutions being stalled and the failure of another US bank, Washington Mutual.

Weak Asian cues resulted in weak opening for Indian markets, and as the day progressed there was more weakness, said Mr P.K. Agarwal, President-Research, Bonanza Portfolio Ltd.

The S&P CNX Nifty fell by more than 3 per cent to close below 4,000 at 3,985.25.

The benchmark index Sensex fell by 3.28 per cent, shedding more than 440 points and closed at 13,102.18.

Asian markets closed in the red today, with Nikkei down 0.94 per cent and the Hang Seng down 1.33 per cent.

Foreign institutional investors were net sellers for Rs 643.04 crore, while domestic institutions were net buyers for Rs 543.57 crore, according to data on NSE.

The problems in the US financial market are forcing the FIIs to continue selling. For the current month to date, SEBI data show that FIIs have been net sellers for close to $2 billion in India.

FIIs are selling here as they are facing a liquidity crunch, owing to huge redemption pressure from overseas financial institutions including mutual funds, said Mr Sanjay Someshwar, sub-broker, Ventura Securities.

Hedge funds have been exiting their positions in India due to the current financial turmoil. A lot of the FII selling has also been on their behalf, according to an analyst.

Sectoral indices

Among the sectoral indices, all except BSE-Auto ended the day in the red. BSE-Realty fell 6.23 per cent, BSE-metal 4.76 per cent, BSE-Bankex 4.27 per cent, BSE-Capital Goods 4.10 per cent, BSE-Power 3.47 per cent and BSE-IT 3.39 per cent.

The market breadth was negative with 2,172 stocks declining and only 442 stocks advancing on the BSE.

The advance-decline ratio is supporting a weak trend, said Mr Alex Matthew, Head of Research of Geojit Financial Services.

A lot of stocks started trading below their respective 200-day daily moving averages or their respective yearly lows sending weak market undertones, he said.

While Ranbaxy Laboratories(8.04 per cent) was the biggest loser on both the NSE and the BSE, the other stocks that fell substantially on the BSE included Sterlite Industries (6.28 per cent), ICICI Bank (5.83 per cent), Grasim Industries (5.72 per cent) and Mahindra & Mahindra (5.06 per cent).