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The carnage on the Indian bourses continued for the second day on Tuesday on the trot after the US downgrade by Standard & Poor's last week. The Sensex opened down 472 points, from its previous close, at 16517.87 and the Nifty at 171 points, over its previous close, at 4,947.
The volatility was higher than on Monday. In fact, benchmark indices were in the green between 12-31 and 12-54 p.m. before slipping back again into the red. “The recovery was on account of short-covering by market players and it remains to be seen how far this bounce back is sustainable,” said Mr Mansingh Deshmukh, Head- Equity, JHP Securities.
The Sensex and the Nifty closed at 16,857.91 and 5,072.85, down 0.78 per cent and 0.89 per cent, respectively, over their previous close.
The volatility index India Vix closed at 34.88, up 6.1 points or 21.2 per cent over its previous close. FIIs sold net equity worth Rs.2105 crore while domestic institutions bought net equity worth Rs1413 crore. Retail investors were net buyers on the BSE and bought equity worth Rs 49 crore in the net.
“We are scared that S&P might downgrade India because of policy inaction even though there is no drag on the Central Government from coalition partners,” said a dealer from a multinational brokerage.
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