Indian equities end lower after volatile trading (Roundup)

October 7th, 2008 - 7:24 pm ICT by IANS  

SensexMumbai, Oct 7 (IANS) Amid volatile trading triggered by fears over recession in the US and possible impact on the Indian financial system, Indian equities fell again Monday despite opening on a positive note.The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) closed at 11,695.24 points, with a loss of 106.46 points, or 0.90 percent, against the previous close at 11,801.70 points, despite opening higher at 12,068.11 points.

As many as 10 out of 13 sector specific indices of the exchange also ended in the red, led by that for consumer durables, down 3.96 percent, followed by 3.04 percent drop for IT index and 2.15 percent for banking index.

“The Indian stocks have gone down due to the selling pressure on foreign funds. They are selling Rs.20 billion worth of stocks a day which Indian mutual funds and pension funds are not able to absorb,” said Niket Shah, Research Analyst, Religare Securities.

“Foreign institutional investors are not ready to look at any positives in India. They are under pressure from hedge funds for liquidity. The Sensex will go down to 9,000-9,200 point level and stay there for some more time,” Shah told IANS.

“Individual investors need not panic as on the uptrend the movement of market from 9,200 points to 20,000 will be fast.”

Curiously, 14 out of 16 shares that go into the basket of 30-share Sensex, ended in the positive territory Tuesday, with gains of 4.17 percent for state-owned NTPC, 3.88 percent for Ranbaxy and 3.26 percent for Bharat Heavy Electricals.

Tata Consultancy, on the other hand, led the losers, down 7.02 percent, followed by 6.94 percent for Larsen and Toubro, 6.35 percent for Sterlite Industries and 6.17 percent for HDFC Bank.

Evidently, the cut in the minimum cash balance against deposits for banks by 50 basis points announced by the Reserve Bank of India (RBI) and the removal of some curbs on foreign funds by the markets watchdog had little impact on sentiments.

Looking ahead, analysts like V. Srinivasan, chief financial officer of Bharti Axa Life Insurance, said a lot depended on how authorities handle the storm in the global financial system, notably in the US.

“Till the real impact of the derivatives problem is unravelled, there will be uncertainty in the global financial circles. In my view, it would take two or three years to write off the bad effects and start on a clean slate,” he said.

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