Friday saw the stock markets in an unusual situation. Despite the FII, domestic institutions and retail segment being net buyers of equity, the Sensex nosedived 477 points to a five-month low in intra-day trade, falling below the 18,000 levels.

Concerns regarding high inflation, and escalating political turmoil in Egypt and West Asia shaved 441 points off the Sensex, which ended the day at 18,008, 2.39 per cent below its previous close.

On the BSE and NSE net purchases by FIIs touched Rs 144 crore; by DIIs Rs 237 crore; and by retail investors Rs 4 crore (only BSE).

So, where did all this money go, and how could stocks fall despite all investor categories recording net purchases? Mr Alex Mathew, Head of Research at Geojit BNP Paribas Financial Services, explained that purchases of the morning would have been substantially higher than sales that happened later. “The selling intensified only during the end of the trading session. Margin calls too made the ground slippery for the markets in the second part of the day.”

The index opened flat but rose 100 points during intra-day trade. It was the Prime Minister's statement expressing concern about high inflation that led to the free fall on Friday.

“This statement from the PM created fresh concerns in the market — which was headed towards bottoming out at around 5,400 (Nifty) — leading to a sell-off in the second half of the session,” said Mr Manish Shah, Associate Director - Equities and Derivatives, Motilal Oswal Securities.

The Nifty was down 2.3 per cent at 5,395. The selling was broad-based as 2,003 scrips declined on the BSE and only 873 advanced. All the sectoral indices too were in the red.

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