Fears of a slowdown in the Indian economy, coupled with unfavourable global cues, dampened investor confidence on Thursday. Volatility remained the order of the day as the 30-share Bombay Stock Exchange (BSE) Sensex gyrated in the range of 706 points before finally closing at 17,526.93 points, a loss of a whopping 612.56 points or 3.38%. Meanwhile, the National Stock Exchange’s (NSE) Nifty plunged 189.3 points or 3.56% to close at 5,133.45 points.

Markets opened with a slight negative bias on Thursday and remained flat due to lack of specific cues from the Asian markets as most of them were closed on Thursday owing to the Chinese lunar New Year holiday. But as the European markets opened on a negative note, the selling pressure started emerging in the Indian market which led it to end deep in the red. The government?s announcement that the economy is likely to grow at a moderate 8.7% during the current fiscal as against 9.6% during 2006-07 also played spoilsport. Vikas Khemani, co-head, institutional equity, Edelweiss Capital said, ?In the short term, markets are going to remain volatile as there is negative news from all over. Due to uncertainty in the markets, investors are really apprehensive and they are even staying away from the primary markets. However, I think markets are at an under-consolidating phase and we may see them remain range bound in the days to come.? According to the provisional figures from the stock exchanges, foreign institutional investors (FIIs) were net sellers to the tune of Rs 860.35 crore while the domestic institutional investors were net buyers at Rs 230.70 crore.

Across-the-board selling made the overall market breadth extremely bleak on the BSE, with only 803 stocks advancing as against decline by 2,002 and 44 remained unchanged.

The bearish view was quite prominent among investors as heavy short build-up was created in the Nifty February contract. It moved in the range of 243 points before finally closing at 5,100 points, a discount of 33 points with respect to the spot price and a discount of 196.75 points with respect to the previous day?s close. The open interest in the Nifty futures increased 4.06% to 3.98 crore.

Among the sectoral indices, huge profit-booking was witnessed in the oil and gas and metals sector, which led their respective indices to lose around 4% each.