The BSE Sensex on Friday dipped below the 10,000-mark?closing at 9,975.35 points?for the first time since July 2006. The bellwether index had touched 21,206.76 on January 10 this year.
Indian equities markets moved in tandem with their Asian peers, despite liquidity concerns having eased in the credit markets and RBI data showing non-food credit holding up at 23.2%. The central bank?s weekly statistical supplement also showed that interest rates on commercial paper issued by companies to raise debt had climbed to a band of 10.25-14.25% at the end of September.
In a related development, critical data released by Sebi on Friday on the effect of short selling by FIIs showed they have not created bear conditions in the Indian market. The data pertains to October 10, 13 and 14 and is part of the market regulator?s plans to improve transparency. Net FII sales in the domestic equity market have peaked at $11.6 billion. Overseas investors were net sellers to the extent of $473.8 million on Friday.
On the last day of the trading week, Asian markets basically responded to concerns like data showing September US housing starts were the slowest in 21 years.
On the BSE, there was a selling surge towards the end of the day on speculation that overseas investors were selling in domestic markets to meet redemption pressures in their home markets. Major pivotals like RIL and Infosys again dragged the Sensex down.
The broader S&P CNX Nifty of the NSE dropped by 194.95 points, or 5.96%, to close at 3,074.35 points. Apart from the huge volatility, the past week saw the Sensex shed almost 552.50 points or 5.24% and the Nifty lost 205.60 points or 6.27%.
Speaking on the downtrend, Infosys chief executive officer Senapathy Gopalakrishnan told Bloomberg, ?The impact is going to be widespread. The most difficult part is we don?t know when stability will come.? On Friday, poor earnings announcements from Satyam Computers seemed to bear out Gopalakrishnan?s concerns.
On the credit front, domestic call rates eased to under 6%, because of which there were no bidders at RBI?s repo window, from where it lends funds to banks at a 9% rate of interest.
The rupee also ended at 48.88, its lowest since June 2002. Due to FII redemption, the central bank?s weekly foreign exchange reserve figure issued on Friday showed a drop of $9.93 billion, slashing India?s foreign exchange reserves to $274 billion.
Clearly, the breaching of the psychological 10k level has unnerved market watchers and this may trigger more selling on Monday, reckon experts. Arun Kejriwal of Kris said, ?I think that panic is going to linger in the market for some more time. We might also see further downward correction in the coming days.?
?People are in a deep shock, it will take some time for them to return in the market. At this point of time, we don?t know where the markets are headed. We might see some relief only when FIIs stop intense selling,? said, Raamdeo Agrawal, director of Motilal Oswal.
All the BSE Sectoral indices ended the day in negative terrain, with the BSE Realty notching up huge losses. The market breadth remained downbeat throughout the day as of 2,652 stocks traded on the BSE, only 179 stocks advanced, 1,877 declined while 56 remained unchanged. In the Sensex pack, all 30 stocks ended lower.