After opening weak and then suffering almost a free fall, Indian equities markets recovered somewhat by mid-afternoon and a key index once again breached the 11,000 mark after having gone below it during the morning session.
There was all round selling pressure as nervous investors grappled with more bad news from European banks and continuous problems in the global financial system despite the best efforts of central banks across the world, analysts said.
Mid-afternoon the 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) was at 11,171.65, down 523.59 points or 4.48 per cent against its previous close at 11,695.24 points.
“There is tremendous nervousness in the market because despite the hard work being done by central banks across the world the crisis is refusing to go away and more and more European banks are getting into trouble,” said Jagannadham Thunuguntla, head of the capital markets arm of India's fourth largest share brokerage firm, the Delhi-based SMC Group.
“Foreign institutional investors, especially hedge funds and private equity funds are selling indiscriminately and at any price as they have now come under tremendous redemption pressure,” Thunuguntla told IANS.
“Together with a major liquidity problem throughout the system there are no buyers even at the current levels,” he added.
In the morning session, the Sensex at one point went down by more than 902 points or 7.71 per cent to touch 10,782, a level that it had last reached July 31, 2006.
The Sensex went below the 11,000 mark for the first time since September 2006, analysts said.
The broader-based S&P 50-share CNX Nifty index of the National Stock Exchange was at 3,451.40, down 155.2 points or 4.30 per cent from its previous close at 3,606.60.
The BSE midcap index was at 3,926.36, down 330.80 points or 7.77 per cent from its previous close on Tuesday at 4,257.16 points.
The BSE smallcap index was at 4,619.83, down 356.56 points or 7.17 per cent from its previous close on Tuesday at 4,976.39 points.