The Hindu Business Line : Markets feel the global tremor

Mumbai, Sept. 29 News that the global financial turmoil is now claiming financial institutions in Europe and the UK sent the Sensex plunging to an 18-month low on Monday, to a sub-13,000 close.

The benchmark index closed at 12,595, falling 506 points or 3.87 per cent from its previous close. Earlier, the Sensex opened flat at 13,109, tracking the Asian markets but drifted to an intra-day low of 12,402, a fall of nearly 700 points from its Friday close.

Global rescue effort

In a weekend development, Europe-based insurance company Fortis had to be rescued by Belgian, Dutch and Luxembourg Governments while UK-based mortgage lender Bradford and Bingley was nationalised after its financial problems surfaced; this fuelled FII selling.

“Continuous FIIs outflows have made the fall more of a liquidity play. For the last five days, the benchmark indices have been falling. It is genuine selling as compared to bear selling,” said Mr Harendra Kumar, Head of Equity Research, Centrum Broking Private Ltd.

Foreign institutional investors were net sellers for Rs 477 crore while the domestic institutional investors were net buyers of shares for Rs 554.82 crore.

Portfolio change

“Besides the European banks now facing crisis, the fall has also been due to investors going for change in their portfolios,” added Mr Kumar.

Morgan Stanley on Monday again offloaded holdings in some more Indian companies, going by the bulk deals reported on the BSE. Even Deutsche Securities, which had been buying shares in large quantities so far, sold shares of Advanta on both the BSE and the NSE.

Scrips hit new lows

“Many heavyweight scrips hit their 52-week lows, which caused panic and delivery-based selling by high net worth indivdiuals. In the F&O segment, a lot of stocks futures recorded higher amounts of open interest addition supporting portfolio hedging and fresh short positions,” said Mr Alex Mathew Head, Research Centre -Geojit Financial Services Ltd.

ICICI Bank was among the top losers, plunging 12 per cent to close at Rs. 493.30 on the BSE.