Selling pressure gathered momentum as the BSE benchmark Sensex on Wednesday fell further by over 238 points on heavy selling by funds in telecom stocks as the government intensified probe into the 2G spectrum allocation scam and a weak global trend.
CBI has launched searches at the homes of former telecom minister A Raja and other officials in connection with 2G spectrum lincensing scam
Bombay Stock Exchange's (BSE) Sensex, which had lost 47 points in the previous session on concerns of interest rate hike, fell further by 238.16 points to 19,696.48, after touching the day's low of 19,611.35.
The wide-based National Stock Exchange (NSE) index Nifty fell by 72.85 to 5,903.70. In volatile trading, the index shuttled between 5,960 and 5,878.60 during the session.
As the selling pressure spread over a wide-front, all the sectoral indices ended in red. In 30-BSE index components, 28 closed with losses while Tata Motors and ONGC ended with moderate gains.
Barring a better close in Japan's Nikkei, a weak trend in the Asian region and lower opening in Europe further dampened the trading sentiment. Asian stocks fell the most in two weeks on speculation that China would raise interest rates to stem inflation.
The MSCI Asia Pacific Index slipped 0.8% to 132.64, the biggest drop since November 26.
In the telecom sector, the nation’s second-largest operator Reliance Communications fell 3.21% to Rs 129.85 as CBI searched homes of A Raja in connection to 2G spectrum lincensing scam.
Unitech Ltd, a real-estate company that has a phone venture with Telenor, dropped 2.26% to Rs 64.85.
Banking shares fell for the third straight day on worries that rising deposit rate, without any change in lending rates, would affect lenders' profit margins. The banking sector index lost 2.03% to 13,068.92 as State Bank of India (SBI) tumbled by 2.01% to Rs 2,807.80, ICICI Bank by 0.39% to Rs 1,106 and HDFC Bank by 3.07% to 2,280.15.
The realty sector tumbled by 2.51% to 2,840.02 as DLF Ltd, Unitech, HDIL, DB Realty stocks declined on concerns that the rise in deposit rate might tighten liquidity in the market.
The metal index lost 2.01% to 16,341.15 after Sterlite retreated 1.77% to Rs 169.15, Hindalco by 2.12% to Rs 222.05, Tata Steel 2.49% to Rs 623.65. Copper and aluminium fell 1.1% in London.
Uflex Ltd continued to hit lower level daily limit by falling further by 16.39% to Rs 163, after its chairman and managing director convicted in a case relating to a land allotment.
However, the falling trend was cushioned as oil company stocks gained on expectations of higher revenue as crude oil prices rose to 26-month high of 90 dollar a barrel in overseas markets. Indian Oil was up Rs 2.75 to Rs 371.75, Hindustan Petroleum by Rs 13.40 to Rs 409.95 and Bharat Petroleum by Rs 14.05 to Rs 677.