Left lurch takes Sensex below 14,000 points
Indian stocks ended lower on Tuesday as the fluid political scenario dwarfed easing concerns of a global liquidity crunch and a consequent pullback rally in world markets.
While most indices in the Asia-Pacific region rose for a second straight day, the benchmark Sensex of the Bombay Stock Exchange closed below 14,000 for the first time since May 15, 2007, as concerns of political instability gripped the bourses. The Sensex closed the day lower by 438 points, or 3 per cent, at 13,989 while the 50-share Nifty of the National Stock Exchange ended at 4,084.50 points, down 2.96 per cent.
“Political concerns have led to some profit booking in the domestic market. A few foreign brokerages have also taken a cautious stance on Indian equities,” said Deepak Jasani, head of retail research at HDFC Securities.
On Saturday, the Left Front warned the ruling Congress of serious consequences over the recently signed Indo-US nuclear deal. As a compromise strategy the Congress put forth the proposal for setting up a panel to look into the aspects of the deal. The Left now wants the government to freeze forthcoming negotiations at the International Atomic Energy Agency as a requirement for accepting the government's suggestion of setting up the review committee.
The market is expected to exhibit more weakness in the coming days. "Technically, the bottoms made in the last fall are due to be re-tested and we are about 200 points away from that. So some more weakness could be seen in the coming days, though the bottom may not be tested immediately," said Jasani.
Meanwhile, the People's Bank of China raised its key lending rates for the fourth time in the year to 7.02 per cent to arrest inflationary pressures. However, this may not impact the Indian market. “Our alignment with the Chinese markets is not as strong as the one with the US,” said Rahul Nangalia of Nangalia Stock Broking.
Besides, foreign institutional investors (FIIs) have remained net sellers of Indian paper throughout the month. According to data available on the Securities and Exchange Board of India website, FIIs have sold equities worth a net Rs 5,398.40 crore in August till last Friday.