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Euro zone economic woes spilt over to Asia with the Indian bourses closing in the red for yet another day after Diwali.
The Nifty was down 68.65 points or 1.29 per cent to close at 5257.95 while the Sensex shed 224 points to close at 17,480.83.
FIIs sold Rs 20-crore worth equity in the net while domestic institutions were net sellers for Rs 573.41 crore.
Retail investors on the BSE were net buyers of equity worth Rs 88 crore. Volatility was up six per cent and the volatility index India VIX closed at 24.02 on Tuesday.
Depressing news
News from the Western world was not encouraging even as MF Global filed for bankruptcy protection and there were reports of Credit Suisse shedding another three per cent of its workforce. Meanwhile, the Greek President sought the approval of his countrymen through a referendum on the package announced by other countries of Euro zone.
All the global indices, including the Dow, Nasdaq and the S&P 500, were down between 1.8 and 2.1 per cent while US 10-year treasury yields softened to 2.01 per cent (from 2.18 per cent) at the time of going to print.
“The whole world is awaiting the result of the Greek referendum on a 50 per cent reduction in its loan repayments in exchange for a $138- billion bailout package,” said a dealer from an Indian brokerage.
“There are also worries of the Italian 10-year bond yields remaining above six per cent for want of takers.”
Experts were surprised at how the global indices rallied last week on news of the Euro zone's unilateral resolution to take matters head-on.
“When the majority of Greek citizens are unwilling to accept any austerity measures how is this EU resolution going to be implemented?” asked the head of research of an Indian brokerage.
Experts said that the countries which had business interests and investments in the PIIGS (Portugal Ireland, Italy, Greece and Spain) countries were more in danger of being affected and this included the top Euro zone nations.
HUL, PNB, BPCL, Wipro and Maruti were the top five gainers on the Nifty while ICICI Bank, M&M, Reliance Infra, Dr Reddy and HCL Tech were the top five losers on the index.
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