Business

Sensex plunges by 96 points

By Our Special Correspondent

MUMBAI MAY 21. The stock market today tumbled on fear of war as the Sensex lost around 96.28 points. The Sensex touched a near-five month low of 3127.87 in intra-day trades. There was a free-fall in stock prices during the day but some minimised the losses towards the close. Negative sentiment is also looming large in the bond (debt) and foreign exchange markets.

The benchmark Bombay Stock Exchange sensitive index (Sensex) today opened at 3266.16, declined to a low of 3127.87 and finally closed at 3186.53 losing 96.28 points from its previous close of 3282.81. On the National Stock Exchange, the S&P CNX nifty index shed 25.14 points to close at 1049.20 against 1074.35.

"We are expecting another bout of panic to come in the near future. But much downside definitely does not look like at the movement.

The market is obviously not factoring in a full scale war. Investors should cautiously add frontline stocks on the down trend. Because the re-bound will be sharp and returns will be above ordinary," said D. V. Ramakrishana Kumar,

Vice-President, Institutional Broking, Motilal Oswal Securities.

"There was large scale nervousness owing to Prime Minister's visit to the border and the kind of poster he adopts," said Mr. Kumar, adding, "institutions were on the sidelines barring a brief intervention towards the close of the day". Today's market movement was led by retail unwinding. "The bank collateral selling can also exaggerate the situation," he added. (Institutions selling shares held with them as collaterals against loans.)

Last minute buying in some select stocks erased some earlier losses. However, the overall sentiment in the market remained bearish and the undertone cautious as investors preferred to sell amidst escalating tension with the mobilisation of huge armies on both sides of the border.

Barring a few stocks, selling pressure was seen almost across the board.

The bond market also was weak on fear of war but started recovering on private placement of 7.40 per cent 2012 Government security (G-Sec) for Rs. 6,000 crores by the Government.

The yield of benchmark 10-year G-Sec was down at 8.17 per cent, then recovered to 8.13 per cent at the close against 8.15 per cent on Monday.

Sentiment in the foreign exchange market is also weak because of the escalating border tensions and the warning by Standard & Poor's, international rating agency, to push India's sovereign ratings to the edge, as it will worsen the deteriorating fiscal situation.

The strong intervention by the central bank saved the rupee from falling to a record low. In volatile trading at the interbank foreign exchange market the rupee closed at 48.98/99 a dollar against 49.02/03. However it touched an intra-day low of 49.04/06.

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