The Hindu Business Line : Sensex loses 413 pts; 2006 gains wiped out

It was freefall for the stock markets on Tuesday with the benchmark BSE-30 Sensex wiping out all gains of 2006 and ending at a six-month low of 9,062.65 points, down 413.50 points or 4.36 per cent from Monday.

Panic selling by high net worth individuals and heavy offloading by mutual funds to meet redemptions drove stocks down. This is the lowest the Sensex has ended at since December 8, 2005.

The market opened lower on weak global indices, and the downward momentum gathered pace as the day progressed, which saw the Sensex breaching the 9,000-level for a brief moment to touch 8,993.58, before recovering slightly on short covering, dealers said.

All indices ended in the red. Just two stocks - SBI and ONGC - in the 30-stock Sensex closed positive. The NSE's S&P CNX Nifty Index fell by 113.55 points or 4.09 per cent to 2,663.30 points - the lowest close since December 6, 2005.

Small and mid-cap stocks suffered yet another day of major fall with several stocks, including Mastek, Carborundum Universal, SpiceJet, and Sintex, losing over 17-18 per cent.

The BSE Mid Cap and BSE Small Cap indices fell by 6.31 per cent and 6.06 per cent respectively.

As many as 766 stocks hit the downward circuit while 54 stocks, including HT Media, Mukta Arts, Tips Industries, TV Today, and several recent listings such as Nitco Tiles, Malu Paper, Emkay Share, Tantia Constructions, and Plethico Pharmaceutical, recorded new lows on Tuesday.

Among the sector indices, the BSE Capital Goods (decline of 6.63 per cent), BSE Metal (6.44 per cent), and BSE Auto (6.21 per cent) were the biggest losers.

"The (lack of) liquidity is driving the markets downwards. There are no major buyers and the volumes are also low," said Mr Dinesh Thakkar, Managing Director of Angel Broking. "There are several funds waiting in the sidelines."

He added that these funds would come in once the uncertainty regarding global interest rate hike is settled.

The market breadth was distinctly negative, with 2,083 stocks ending down and 271 closing with gains.

Mutual funds have been net sellers for Rs 1,421 crore during the month. In contrast, foreign funds were net buyers for Rs 931.60 crore ($206 million) in the same period.

However, on Tuesday, FIIs were net sellers for Rs 171.14 crore, according to provisional figures by the NSE.

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