The weak US market created a ripple effect on key Asian bourses on Wednesday, dragging down the Sensex by a whopping 458 points.
The 30-share Sensex of the Bombay Stock Exchange (BSE), after opening with a negative gap in line with other Asian indices, went down further as European markets opened on a negative note. The benchmark index closed the day at 17,617.60 points, shedding 458.06 points or 2.53% while the National Stock Exchange (NSE) Nifty lost 126.35 points or 2.39% to close at 5,154.45 points.
Following weak overnight closing of the US markets, Hong Kong?s Hang Seng fell by 532.59 points or 2.21% to close at 23,590.58 while China?s Shanghai Composite lost 97.27 points or 2.09% before finally closing at 4,567.03. Japan’s Nikkei 225 was severely hit on Wednesday as it lost close to 3.25% or 447.54 points to close at 13,310.37 points.
Selling pressures was also witnessed in the Small and the Mid Cap space which fell in line with the heavy weights. The BSE Mid Cap fell 95.94 points or 1.25% to close at 7,589.39 points while the BSE Small Cap lost 164.28 points or 1.68% before closing at 9,631.26 points.
Amitabh Chakraborty, president-equity, Religare Securities, said, “Risk aversion among foreign institutional investors (FIIs) is at its peak right now due to the uncertainity related with the US subprime crisis. Lack of buying on their part is weakening the domestic equity bourses. Also, FIIs are keenly awaiting the outcome of the Budget 2008-09, as it is the last budget of the UPA government before the next general election. They want to see how the finance minister balances his budget with populist measures along with meeting FRBM target.”
Among the sectoral indices, huge profit-booking was witnessed in realty and banking stocks. BSE Realty lost 361.50 points or 3.59% to close at 9,709.24 points while the BSE Bankex went down by 353.95 points or 3.23% to close at 10,609.81 points. Other sectoral indices ended in the negative losing in the range of 1 to 2.5% except the BSE IT which bucked the trend with a marginal gain of 0.21%.
According to the provisional figures from stock exchanges, FIIs were net sellers at Rs 266.44 crore while domestic institutional investors were net buyers at Rs 256.18 crore.
In the F&O market, investors reflected bearish views as heavy short built-up was created in Nifty February futures which shed 131.10 points or 2.49% with respect to its previous day’s close before closing at 5,130 points. The contract was trading at a discount of 24 points with respect to its spot price. The open interest increased by 27.7 lakh to 3.8 crore.
