Panic, no triggers = blood on St
INTRO: Sensex at 2-month low; there may be more to go, say some
Nitin Shrivastava & Sachin P Mampatta
Mumbai
Lack of short-term triggers and global profit sales sent the Sensex on a tailspin on Tuesday.
The 30-share index shed 491.34 points to close the day at 15404.94, the lowest level in two months. The index had closed at 15398.33 on September 3.
"Valuations were stretched. The markets were rising because of liquidity. People have realised that growth (in the second quarter) was on account of government stimulus. There is a lack of topline growth," said Anand Tandon, director of equities at Brics Securities.
The wide swathe of selling means investor wealth has eroded by Rs 665,744 crore in the last 10 days. On Tuesday alone, losses were Rs 174,111 crore.
"There was some panic as stop-losses triggered for many short-term traders," said Jitendra Panda, senior vice-president at Motilal Oswal Financial Services.
For the third time in the November F&O series, the fall was backed by huge volumes of more than Rs 100,000 crore.
That's worrying, said experts.
"There is significant downside left, up to 15%. After the fall, we may see a couple of days upside, which should be used as an opportunity to sell," Tandon said.
Foreign institutional investors were net sellers by Rs 874.26 crore, while domestic institutions bought Rs 751.95 crore.
Motilal's Panda expects a technical pullback with long-term players likely to start coming in at 4500 levels.
"But we could be looking at 4300 on the downside," he said. "Nifty 4640-4700 will act as resistances in the medium term."
The realty sector continued to get a thrashing on concerns of firming interest rates after the Reserve Bank of India signalled the end of accommodative monetary policy.
BSE Realty, the sector benchmark, dropped 9.76%.
The metals index declined 5.95% and oil & gas dipped 4.10%.
Midcap and small cap indices also declined more than the Sensex, at 3.74% and 4.50%, respectively.
Some feel the September quarter financial results are also to blame for the fall.
"The results have not been up to the mark. Many companies, which might be considered market movers disappointed," said Sanjeev Patni, head of institutional equities at Centrum Broking.
Barring China, major Asian markets ended in the red. Hong Kong's Hang Seng dropped 1.76%, while South Korea's Kospi fell 0.6%.
The Japanese markets were closed on account of a holiday.
The Shanghai Composite and the Shenzhen Composite, however, gained 1.22% and 1.72%, respectively.
Later in the day, even the European markets closed around 2% lower.
Signs that banks in the developed world are still not out of the woods affected global sentiment, said experts.
The Royal Bank of Scotland and Lloyds Banking Group are still in need of funds, while UBS has made a third quarter loss of over Rs 25,000 crore.



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