Equity indices ended lower on Tuesday after opening with a huge positive gap. Domestic markets staged a smart rally for the entire day, but in the final trading hour, weak European markets and concerns about a global recession dragged prices down.
Dealers in the market said that there was profit-booking across selective counters. The 30-share Sensex of the Bombay Stock Exchange (BSE) fell 207.59 points, or 2.33%, to end at 8,695.53 points.
Indian bourses started on an upbeat note following positive cues from world markets. Asian indices surged after the US government’s rescue plan for Citigroup was announced.
Investor sentiment was also lifted also by US president-elect Barack Obama’s plan for another bailout package of $700 billion to support the US economy and to create 2.5 million new jobs in two years.
During the final hours of trading, markets trimmed all gains and ended the day in the red. The broader S&P CNX Nifty of National Stock Exchange (NSE) shed 54.25 points, or 2%, to close at 2,654 points.
An analyst from a leading broking house said, “Apart from huge volatility, the sentiments of the investors remain weak, as economic fundamentals are not strong enough. Also the derivatives contracts end this week, so we might witness more instability in the market in coming days.”
Among the BSE sectoral indices, only consumer durables (CD) ended the day with gains. Oil & gas, capital goods (CG) and realty were the worst performing indices of the day. Out of 2,524 stocks traded on the BSE, only 995 stocks were in green. As many as 1,442 stocks ended in the red and 87 remained unchanged. In the Sensex, only seven stocks advanced and other 23 declined.
Some dealers in the markets say that the Reserve Bank of India may further cut the cash reserve ratio and repo rate in the coming days to infuse more liquidity in markets.