Key Indian market Index ends over 500 points down (Roundup)November 5th, 2008 - 8:10 pm ICT by IANS
Mumbai, Nov 5 (IANS) A key Indian share market index ended Wednesday with a loss of over 500 points, or nearly 5 percent, as the market mood once again went into the profit-booking mode after three successive trading sessions of gains.Explaining Wednesday’s crash, analysts said with foreign institutional investors (FIIs) still under pressure due to the global financial tsunami, they were certain to sell every time there is a bounce back to recover as much cash as they can.
After three days of gains, the 30-share benchmark sensitive index (Sensex) of the Bombay Stock Exchange (BSE) finished Wednesday at 10,120.01, down 511.11 points or 4.81 percent from its previous close Tuesday at 10,631.12 points.
The market had, however, opened strong on positive global cues but selling by FIIs and foreign hedge funds soon saw the key index dip and go into the red. The promise by some banks to lower interest rates had also boosted sentiments.
The broader-based 50 share S&P CNX Nifty of the National Stock Exchange (NSE) also opened strong but closed at 2,994.95, down 147.15 points or 4.68 percent from its previous day’s close at 3,142.10 points.
The BSE midcap index too finished in the red at 3,394.61, down 51.61 points or 1.50 percent from its previous close at 3,446.22 points.
The BSE smallcap index closed at 3,964.78, down 70.33 points or 1.74 percent from its previous close at 4,035.11 points.
Except health care, all other sectoral indices showed losses at the finish. The hardest hit was oil and gas, followed by metals, realty and capital goods in that order.
Of the stocks that make up the Sensex, only three ended with gains. Wipro Ltd led the gainers, up 2.72 percent, followed by Satyam Computer, up 0.27 percent, and Maruti Suzuki, up 0.08 percent.
Among the losers, Reliance Industries lost 12.76 percent, Tata Steel shed 10.05 percent, Jaiprakash Associates lost 10.01 percent and Reliance Communications lost 9.5 percent.
Some 1,000 stocks or 37.91 percent advanced, 1,565 stocks or 59.33 percent declined and 73 or 2.77 percent remained unchanged.
The gains of the last three trading sessions were natural, given the massive losses that the market suffered in the past few weeks, analysts said. But the underlying sentiment is still negative, they said.
“If you look at the volumes during the last three days, trading was to the tune of only Rs.400-450 billion when during the bull phase it was Rs.1,200 billion and even during the bear phase this year it was Rs.700-750 billion,” said Jagannadham Thunuguntla, director of India’s fourth largest share brokerage firm, the Delhi-based SMC Group.
“So, this was a typical bounce in a bear market mainly due to short covering but the fall is mainly because of selling at higher levels after the market had hit less than 8,000 levels last week,” Thunuguntla said.
He also said that FIIs had invested some $51 billion during 2003-08 and have sold to the tune of $11 billion from the beginning of this year till date.
“So, they still have about $41 billion in the market which they will try to take out whenever the market bounces a little so that they at least get 40 or 50 paise to the rupee on their investment,” he said.
Most overseas markets, however, ended in the green on Barack Obama’s victory in the US presidential elections.
Both the New York Stock Exchange and the Nasdaq indices ended Tuesday in the green with gains of 4.79 percent and 3.12 percent respectively.
In Asia, Nikkei, the key index of the Tokyo Stock Exchange ended with a gain of 4.46 percent, while Hang Seng, the key index of the Hong Kong Stock Exchange finished with a gain of 3.17 percent.
“Since there is still so much underlying nervousness, it is very difficult to see how there can be any sustained bull run in this scenario,” Thunuguntla said.
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