A slump in local industrial growth and fears triggered across Asia by the US dollar’s surge against the Japanese yen thrashed Dalal Street with a double-whammy on Thursday, as the Sensex plunged 4.8 per cent, hitting sentiments and stopping bargain hunters on their tracks.
It took six long months for the bulls to conquer peak 21K on the Sensex, but only two months for the bears to drag them from an all-time high of 21206 recorded on January 10.
The Sensex had begun climbing last August from the levels to which it plunged back on Thursday.
The Sensex dropped by 770.63 points or 4.8 per cent on the BSE to close at 15,357.35 points, while the broader Nifty on the National Stock Exchange fell 248.40 points or 5.1 per cent to end the day at 4623.60 points. Both indices have closed well below their 200-day moving averages, a key technical support level.
“It is a pretty bad picture. There seems to be some more pain left on the downside. Confidence levels are very low. One can buy with a long-term perspective. But never leverage in this market,” said Manish Sonthalia, vice-president of equity strategy at Motilal Oswal Securities. While the bulk of the shares have not been downgraded, some did, hitting sentiment. “With around seven-eight companies in the Sensex pack undergoing an earnings downgrade, the scenario turned sour on the bourses. ICICI Bank, ITC and some real estate stocks have been downgraded by some foreign brokerage houses,” said a dealer with a domestic brokerage.
Realty major DLF lost the most in Sensex pack. The scrip was down 14.87 per cent or Rs 105.95 to close at Rs 606.75. It was followed by Reliance Energy (down 9.87 per cent to Rs 1197.25), Hindalco (down 9.44 per cent at Rs 173.10) and Tata Steel (down 9 per cent at Rs 697.20). Boiling crude prices and fears of a US recession remain key issues.
FIIs buy, local MFs sell
Foreign institutional investors, who have been net sellers of Indian paper for a major part ever since the sub-prime crisis broke out in the US, have suddenly turned net buyers of shares. But domestic mutual funds, which had been net buyers of shares since the beginning of the correction in mid-January, have turned net sellers of domestic shares, as they face redemption pressures ahead of the end of fiscal.
According to Securities and Exchange Board of India data, FIIs bought equity worth a net Rs 143.60 crore on Tuesday. They were net sellers of Indian paper worth Rs 13,035 crore in January, while mutual funds bought shares worth a net Rs 7,702 crore. In the current month till data, mutual funds have been net sellers of equity worth Rs 776 crore.