The Hindu Business Line : Sensex sinks on poll forecast — Loses 213 in heaviest fall in 3 years

THE BSE Sensex fell more than 200 points - the hardest single-day fall in over three years - today after opinion and exit polls conjured up visions of political instability at the Centre.

The approaching expiry of April futures and options on Thursday and the Reserve Bank of India curbing bankers' freedom to pay dividend pushed pivotal stocks down further. In other markets, the rupee lost 13 paise to the dollar and bond prices crashed by more than a rupee.

Frightened investors ordered brokers to sell major stocks in the morning itself that saw the 30-share benchmark of the BSE open with a gap of 84 points, the widest since the September morning when terrorists rammed commercial jets into the twin towers of the World Trade Centre in New York. By the end of trading today, it had fallen 3.6 per cent or 213 points, the steepest since March 2001. The S&P CNX Nifty of the National Stock Exchange lost nearly 4 per cent from its previous close of 1892.45 to end the day today at 1817.25.

"Whatever profits I had made over a couple of months I lost in a single session today," said a distraught investor. He booked a loss of about Rs 4 lakh-Rs 5 lakh selling shares of ACC, Tata Steel and Infosys, bluechips that lost 7 per cent, 7.3 per cent and 3.2 per cent respectively.

Ms Jyoti Vaswani, fund manager at JM Mutual Fund, said, "The market reacted to the exit polls. The futures and options expiry on Thursday also led to some positions getting squared off. It basically appeared to be traders' selling."

DSP Merrill Lynch had predicted in an April 19 report that if any coalition manages more than 300 seats the Sensex is likely to rise above 7000 but a non-BJP, non-Congress minority Government may bring the index below 5000.

A Mumbai stock broker in a pensive mood as the Sensex crashed 213 points on Tuesday.

Trading volumes were thin in the morning and the mood was decidedly bearish. "The market opened weak. I think it may fall a little more but that could be an opportunity to buy. Today's fall has factored in the exit poll results," said Mr Sanjay Vaid, Head of institutional sales at JetAge Securities.

However, a dealer with a private bank said several major stocks had closed at the day's lowest price. "That is not a good sign. And the exit polls would make rollover (futures and options contracts) difficult," he said.

On the BSE for every stock that advanced more than four declined. Only eight of the top 200 stocks on the exchange gained today.

The biggest losers among indices were the ones that track banks and state-owned companies. The BSE PSU index lost nearly 5 per cent to and the BSE Bankex lost 3.82 per cent.

"The market appears a little shaky but there were buyers in select stocks at lower levels," Mr Sushil Choksey of Rosy Blue Securities said. The delivery data of BSE and NSE suggested good buying in Hindustan Lever, ITC, Reliance Ind and Tata Motors.

A media statement by Mr Jagdish Shettigar, member of the Prime Minister's Economic Advisory Council, depressed sentiment further in the afternoon. "This is the first election where economic development is an issue and I admit it has not been as easy to market (economic development) as we thought," Mr Shettigar said. The Sensex that had by then lost about 140 points went into a free fall in spite of buying support from LIC, GIC and UTI.

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