Sensex sheds 345 points as FII worries drown rate-pause mood
The Bombay Stock Exchange Sensex tumbled yet again on Friday, closing 345 points, or 2.2%, lower at 15,491 points after a plunge took it down 411 points intraday.business Updated: Dec 16, 2011 21:44 IST
The Bombay Stock Exchange Sensex tumbled yet again on Friday, closing 345 points, or 2.2%, lower at 15,491 points after a plunge took it down 411 points intraday.
Traders said investors were more worried about a pullout of funds by foreign institutional investors (FIIs) that overwhelmed a positive signal from the RBI that seemed to set the stage for an interest rate reversal with a pause after 20 months.
The fall caught the brokers and analysts by surprise as the Sensex had opened in the positive zone in the morning, touching an intra-day high of 16,069 — a gain of 232 points, or 1.5%.
The 50-share Nifty touched a two-year low, closing at 4,652 points, down 2.0%.
“The fall was exaggerated and surprising but the RBI is not the culprit — had it been policy related, it would have fallen immediately after noon when the policy was announced. It’s more to do with the lack of conviction and confidence in the market by the FIIs,” said Jagannadham Thunuguntla, strategist and head of research, SMC Global Securities.
“I believe the Sensex will go down to 13,000 levels as the next one to two year economic
outlook looks subdued and we expect disastrous results for the December quarter. There’s a high probability that next week could see a further fall in the Sensex,” added Thunuguntla.