The Hindu Business Line : Sensex sinks below 12,000

Mumbai, Oct. 6 The benchmark Sensex fell by a massive 724 points to close below the 12000-level for the first time in more than two years, as the panic in the international markets gripped domestic investors too.

“There are large-scale apprehensions about the workability of the US bailout plan and importantly, whether European banks could weather the credit crisis,” said Mr Amitabh Chakraborty, President (equity), Religare Securities Ltd.

The domestic market was characterised by aggressive selling on the FII counters (stocks in which FII stakes are high) on talk that a number of hedge funds are witnessing redemptions, said marketmen.

There was panic selling in frontline stocks as well as in select mid-caps by FIIs and select high networth individuals whose positions were highly leveraged, they said.

FIIs were net sellers of equity for Rs 1,169 crore while the domestic institutions were net buyers for Rs 661 crore.

Sensex fell 5.78 per cent on Monday while the Nifty fell 5.66 per cent to close at 3,602.35.

The recent developments in the global financial sector and increasing signs of a slowdown in developed economies have led to increased uncertainty in equity markets across the globe, said Mr Siva Subramanian K.N., Senior Portfolio Manager - Equity, Franklin Templeton.

Weak global cues

On Monday, Indian markets were merely following global cues, especially the European markets as they opened very low on news of Fortis being bailed out by the UK Government. France’s CAC 40, Germany’s DAX and UK’s FTSE 100 were down between 3.06 per cent and 5.63 per cent.

The Asian markets too were in red with Hang Seng down by 4.11 per cent and Nikkei down 4.25 per cent. Even as the Dow opened late evening India time on Monday, it fell below 10000 for the first time in four years.

At the time of writing, Dow was down 4.75 per cent and the Nasdaq down 5.55 per cent.

All the sectoral Indian indices ended the day in red today with the heaviest selling witnessed in Consumer durables and Realty. The market breadth was very narrow with more than 2,369 stocks declining and only 281 advancing on the BSE.