Sensex snaps rally, dips 324 points

Written by Markets Bureau | Mumbai | Updated: Jan 16 2009, 05:34am hrs
Equities on Thursday snapped the previous days gains on selling across the board. Indices closed lower despite a dip in inflation numbers. Weak cues from global markets, and the news of Nortel filing for Chapter 11 bankruptcy dented the market sentiments. Dealers in the market say that the fraud-hit Satyam Computer Services plunged after investors hopes for a government bailout faded. Inflation for the week ended January 3, 2009, stood at 5.24% from 5.91% in the previous week.

The 30-share Sensex of Bombay Stock Exchange (BSE) was down by 323.75 points or 3.45% to close the day at 9,046.74 points. The broader S&P CNX Nifty of National Stock Exchange (NSE) lost 98.60 points or 3.48% to close the day at 2,736.70 points. The Volatility Index (Vix) of NSE has edged up to 45.17.

Deven Choksey, managing director of KR Choksey Securities said, We saw IT stocks being nervous after news that Nortel has filed bankruptcy. Apart from that weak cues from the global markets had also some negative impact on the domestic markets, we might witness more volatility in the markets in the coming days.

Markets started the day with negative gap due to weak cues from the US markets and continued to trade lower with heavy selling in the IT and Banking stocks and finally closed the day on negative note. An analyst from the leading broking house said, Anxiety for the sluggish global economy along with decline in corporate earnings also contributed to huge sell off that led the market to close with heavy losses.

Foreign institutional investors (FIIs) were net buyers of equities worth Rs 74.8 crore. Bankex, the index of Banking on the BSE was the worst performer of the day as it was down by over 5.5% on the deepening banking crisis in the US and reporting of increased non-performing loans especially in private sector banks. Indias second biggest developer Unitech fell after its credit rating was cut to non-investment grade by Fitch Ratings on uncertainty over its ability to repay debt. It closed the day at Rs 31.85 down by Rs 3.15 or 9%.

Apart from Banking, IT was the other sector, which saw huge sell-off pressure from the investors after Nortel has filed bankruptcy. Infosys, Wipro and TCS all the stocks closed the day in red.

International markets are likely to remain under pressure due to the problems in their country. I dont think so that corporate earnings might have a negative impact on the markets, as we assume that results will be in line of expectation, added Choksey.

All the sectors in the BSE Sectoral indices ended the day on the negative terrain. The market breath remained weak as out of 2,447 stocks traded on BSE 698 stocks closed in green, 1,649 stocks closed in red while 100 stocks remained unchanged. In Sensex, only one stock advanced and remaining 29 stocks declined.

Theres lot of panic in the mid of investors as they feel that more unexpected events might arise in the coming days, said an analyst.