The bears consolidated their grip over the market on Tuesday, forcing the Sensex to end the day below the 13,000-point mark. The data on Index of Industrial Production (IIP) — representing a fall in October 2006 compared to the previous year — also contributed to the fall.
The Sensex slid 404.41 points to close the session at 12,995.02, as the market failed to garner the necessary support to reverse Monday’s feverish trend kicked off by a hike in Cash Reserve Ratio (CRR). The NSE Nifty shed 132.6 points to close at 3,716.90.
“Market seems to have over-reacted to the CRR, though the correction is welcome. The market may remain choppy for a few days now,” said Nitin Raheja, chief investment officer, Dawnay Day AV Financial Services.
Though the Sensex managed to open slightly higher than Monday’s close, at 13,417 points, it gyrated heavily and lost ground till 3 p.m., when some buying by institutional investors took place. But for this last-minute interest, the market might have lost about 600 points.
“The market could not garner support from any section of the market participants till the last half-an-hour when some buying happened. Even insurance companies, known for bottom-fishing, were seen to be keeping away,” said Kirti Bagri, dealer of Asit C Mehta Investment Intermediates.
{{/usCountry}}“The market could not garner support from any section of the market participants till the last half-an-hour when some buying happened. Even insurance companies, known for bottom-fishing, were seen to be keeping away,” said Kirti Bagri, dealer of Asit C Mehta Investment Intermediates.
{{/usCountry}}The IIP -- a measure of growth in production in manufacturing, power generation and mining -- for October 2006 slipped to 6.2 per cent (the lowest this fiscal), from 9.8 per cent for the same month the previous year. But the IIP for April-October averaged 10.3 per cent compared to 8.6 per cent for the same period last year.
“The IIP would not have impacted the market much if the latter were in a bull phase, given that there was a higher average growth for the first seven months,” said Ashok Choksey, director, KR Choksey Shares & Sec.
Devesh Kumar, head (equities), ICICI Securities, said the market could settle by the weekend. “It is a technical correction. It will continue for a couple of days.”