The BSE Sensex fluctuated wildly on Tuesday, plunging 520 points till mid-afternoon to 17,448.71 before recovering dramatically on to end 28 points higher at 17,996.15 as the rupee plumbed new depths against the US dollar.
Panic-stricken investors dumped stocks in morning trade on fears of a US-led attack on Syria and a further slide in the rupee, which fell to yet another lifetime low of 68.80.
Investors were also concerned about the Food Security Bill’s subsidy burden and capital outflows following the expected tapering of bond buying by the US Federal Reserve next month.
However, concerted bottom fishing by institutional investors such as LIC and mutual funds helped the markets recover, brokers said. IT, metal and tech stocks posted gains during the day while public sector and consumer durables shares fell.
“We feel that the tension of Syria is temporary in nature but the overall sentiment is too weak and might help bears to take the advantage of it,” said Shrikant Chouhan, head of research, Kotak Securities.
The broader Nifty index on the National Stock Exchange also recovered from its initial sharp fall, although it closed down by 2.45 points at a 13-month low of 5,285.