Operators liquidated their positions in the derivatives segment in the wake of a hike in margins which accentuated the selling pressure in the latter part of the day. The Sensex has lost 140 points in the last two trading sessions.
The S&P CNX Nifty also lost 29.50 points down 1.87 per cent to 1,550.45 while FE constituted FEfty slipped by 32.24 points or 1.81 per cent to close the week at 1,752.11.
According to dealers, the NSE has imposed additional margins on brokers holding huge positions in derivatives. Talks that additional margins would be payable in cash, and shares will not be accepted for the base minimum capital, provided further impetus for the selling. NSE is also believed to have asked brokers to reduce exposure in the cash market to 25 times their base capital, from 33 times their base capital earlier.
The nervousness that gripped the market also stemmed from the slow down in inflows from foreign institutional investors (FIIs). In the last few trading sessions, though FIIs inflows have declined, their net investment in calendar 2003 has crossed $6 billion mark and stood at $6.049 billion as on November 13, 2003.
FIIs net inflow has remained in the range of Rs 56-233 crore, compared to the Rs 300-500 crore levels witnessed earlier, however their gross purchases and gross sales remain high, indicating that FIIs are churning their portfolio, explained a dealer. Additionally, there was selling from margin traders as brokers, who fund margin trading in the market demanded higher margins, he added.
Blue-chips succumbed to selling pressure and heavyweights like Reliance Industries Ltd (RIL) along with technology, cement, auto and oil & gas sector stocks led the fall. RIL down 2.9 per cent to Rs 463 remained weak and was in the red throughout the trading session.
Tech stocks also fell sharply with Satyam Computer plunging 4 per cent to Rs 310.80, Infosys Technologies down 3 per cent to Rs 4,585 and Wipro down marginally by 0.3 per cent to Rs 1,415 lost ground in volatile trades.
Cement shares also came under fire as L&T plunged by 5 per cent to Rs 390, Grasim lost 3.7 per cent to Rs 890, ACC shed 2.2 per cent to Rs 223, and Gujarat Ambuja Cements lost 2 per cent to Rs 261.