Goes under 11K; FIIs still selling
BEARS RAN the show on Dalal Street for the second consecutive day on Friday. With foreign institutional investors (FIIs) interested only in selling, the BSE Sensex saw an erosion of 452.8 points (4 per cent).india Updated: May 20, 2006 14:50 IST
BEARS RAN the show on Dalal Street for the second consecutive day on Friday. With foreign institutional investors (FIIs) interested only in selling, the BSE Sensex saw an erosion of 452.8 points (4 per cent).
On Thursday, the index had lost a record 826 points. The selling was triggered by a combination of institutional and retail investors. FIIs continued their selling spree. Between May 11 and May 18, they sold shares worth $818 million. According to conservative estimates, they must have sold over $100 million worth of shares on Friday. That is, FIIs have sold close to a billion dollars worth of shares since May 11.
The Sensex ended at 10,938.6 points after an intra-day low of 10,799. On the NSE, the Nifty ended 142 points lower, at 3,246.9.
"A lot of brokerages are burdened with margin calls and are forced to sell in this market," said a leading brokering house. Although domestic mutual funds continued their value-hunting, they could not stall the falling market. Between May 11 and May 17, mutual funds made net purchases of Rs 2,440 crore. But they have slowed down their buying and are probably waiting
for the market to settle at a comfortable level.
Friday's selling pressure intensified after stock exchanges triggered the market-to-market margin -- this forces heavy selling pressure in the future and option (F&O) segment.
Making a killing in this declining market, FIIs too were found doing reverse arbitrage where they were selling in the cash segment and buying in the F&O segment for May futures.
Since there is a huge open position of about Rs 35,000 crore in the F&O segment, retail investors were the biggest losers.
1 CPM has demanded the reintroduction of capital gains tax to check the volatility in the stock markets. Sitaram Yechury said steps were also needed to protect small investors
2 In Rajya Sabha, BJP’s S.S. Ahluwalia said release of a 1989 CBDT circular led to a kind of price manipulation