Despite a static rate of inflation during the week, the stock market snapped a five-day-long rally as index heavyweights witnessed selling ahead of the US economic data. Further, there were talks on the Street that the Reserve Bank of India had convened a meeting to regulate the end use of funds raised by corporates via external commercial borrowings (ECBs). This gave jitters to a market that has been driven by liquidity factors.
"With domestic interest rates having gone up, putting curbs on ECBs would make fund raising expensive for companies," said an analyst of a domestic brokerage firm.
Tracking weak Asian markets, the BSE Sensex slid by 320.30 points or 2.25 per cent to close at 13,908.58, while the Nifty of the National Stock Exchange ended the day lower by 94.35 points or 2.26 per cent at 4,083.50.
Analysts feel that in the absence of any major positive triggers, and the approaching lean week (two consecutive trading holidays) the markets could stay weak. "Reliance results came yesterday and the markets have seemingly run out of any fresh triggers. Investor participation could be very low in the next week. The market is expected to show a clear direction in a couple of weeks from now," says Sandeep Shenoy, strategist of Pioneer Intermediaries.
A day after the company announced above-expected results, the shares of index heavyweight Reliance Industries declined by 3.67 per cent on the BSE.
Despite recording an 89 per cent growth in net profits in the fourth quarter ended March 2007, shares of Bharti Airtel plunged by 4.5 per cent to end the day at Rs 826.25.