Asia still feels Europe jitters, Sensex plummets 159 points

The country?s indices fell in line with Asian indices on worries that measures to rein in fiscal deficit by European countries would hurt global economic growth. However, the benchmark indices pared steep intra-day losses amid high volatility. The BSE Sensex was down 443 points at noon before recovering in the second half of the trade.

The Nifty recovered to edge past the psychological 5,000 levels, while the Sensex closed up about 274 points from the day?s low. The Sensex fell 159.04 points, or 0.94%, to close at 16,835.56, while the Nifty was down 33.6 points, or 0.66%, at 5059.9.

?The market rebounded tracking gains in European markets and on news that the monsoon had reached Andaman & Nicobar Islands three days early,? said Dinesh Dalmia, director, Yashwi Securities. ?Robust corporate results from L&T and Gail India also helped the market bounce back.?

?L&T saved our day,? said Ambareesh Baliga, vice-president of Karvy Stock Broking, adding, even that though domestic shares declined, it performed better than its regional peers.

European shares rose and US index futures rallied, recovering from the May 14 decline. The Stoxx Europe 600 Index climbed 0.8% as of 11:52 am in London. The MSCI Asia Pacific Index fell 2.8% to 116.68 at 6:36 pm in Tokyo, the biggest slide since November 27. Nikkei 225, Hang Seng and Kospi fell over two percentage points each.

China’s Shanghai Composite dipped the most at 5.07% on worries that China will step up measures to contain property price rises.

FIIs sold shares worth Rs 1,224 crore, while domestic institutional investors bought Rs 381 crore of shares, according to BSE’s provisional estimates. 24 of the 30 Sensex components declined. In the broader market, there were 1,746 declines compared with 1056 advances.

?In the near term, money flow into our country may be hampered due to risk aversion by investors. But in the long term, the market follows the economy and so, the long-term outlook is bullish in a growing economy like ours,? Baliga said. Most of the BSE sectoral indices ended in the red. However, the Capital Goods index bucked the trend, rising 2.8%.

?The buyback announcement by ABB promoters was a positive trigger for the sector. It indicates the promoters are anticipating their business to grow faster than expected and prospects for the sector are bright,? said Dalmia.