Sensex makes year's biggest fall on Wednesday
This was the day people had been dreading for some time, said the director of a brokerage firm.india Updated: Mar 09, 2006 12:49 IST
The key share market index plunged sharply lower on Wednesday, recording its biggest fall in the current year, spooked by large-scale selling by foreign funds in metal and other heavyweight stocks.
The BSE Sensex closed with a whopping loss of 216.82 points at 10,508.85 after hitting an intraday low of 10,493.91.
It was the sharpest single-day fall in the past five-and-a-half months since September 22, 2005 when the benchmark 30-share Sensex fell 265.5 points.
"This was the day people had been dreading for some time. Aggressive short- selling pulled the markets down sharply. We expect to see more weakness in the system," said Rajesh Jain, director with brokerage Pranav Securities.
The NSE Nifty closed 66.10 points lower at 3,116.70, after hitting an intraday low of 3,107.90.
Earlier, the stock market opened for the day on a bearish note and slipped over 100 points in the early trade as institutional investors rushed to dump shares after last few days record gains on the bourses.
The stock market has been on a roll since the presentation of the annual financial budget on February 28.
The market mood was boosted by the budget's thrust on hiking outlays on developmental projects without increasing the corporate tax with a view to put the economy on a higher trajectory of growth.
"The stock market was clearly in the overbought zone and a correction was long overdue. I think we should look at today's fall as the beginning of the correction process," said Deepak Shah, a market analyst.
"The correction has been triggered by large-scale selling by foreign institutional investors in sectors like metal and fast moving consumer goods. The weakness in the global market has also added to the pressure," added Shah.
Foreign institutional funds, the backbone of India's liquidity starved capital market, pumped in a record $10.7 billion in the stock market in 2005 and had bought shares worth over $1.5 billion till last weekend in the current year.
The bomb blasts at Sankatmochan temple in Varanasi, which claimed twenty lives also was cited as a negative factor for the market's weakness.
The stocks crash, however, was seen as a necessary and healthy correction to the overheated market.
Tata Steel, Hindalco, RIL, ONGC, BHEL, Tata Motor, Maruti Udyog, HDFC, HLL, Bajaj Auto, Bharti Tele, L&T, ITC and ICICI Bank recorded sharp falls.
The BSE metal index was down 2.28 per cent in the intra-day trade, while FMCG index was down 1.8 per cent on the back of heavy profit booking in shares of Hindustan Lever, Dabur, Nestle and Procter and Gamble.
Losses were also witnessed in stocks of oil, technology, banking and consumer durables companies.