Date:14/04/2006 URL: http://www.thehindubusinessline.com/2006/04/14/stories/2006041403210100.htm

Back Sensex drops 118 points as FIIs press sell button

Our Bureau

Mumbai , April 13

A day after the steep decline of over 300 points, the benchmark Bombay Stock Exchange (BSE) Sensex fell by another 118.50 points (or 1.04 per cent) on Thursday, wiping off over 600 points from its peak in the last four trading sessions, to close at 11237.23 on heavy selling by foreign funds.

"Over the last seven trading sessions, foreign institutional investors (FIIs) have been net sellers of $1.75 billion (Rs 7,712 crore) — both cash and F&O combined. Of the total sale of Rs 7,099 crore in futures, Rs 5,220 crore (almost 74 per cent) has been sold in stock futures. Also, the entire sale in stock futures is directional positions (and not arbitrage), as they have been net sellers of Rs 613 crore in the cash segment for the same period," said Edelweiss Securities. "FIIs have pressed the sell button," it said in its research report on Thursday.

During a volatile day of trading, the Sensex dived by 300 points intra-day, before recovering on short covering and value buying at lower levels, dealers said. All the sectoral indices were down for the second day running, ahead of the market holidays till Monday. The National Stock Exchange's (NSE) S&P CNX Nifty index declined by 34.50 points (1.02 per cent) to close at 3345.50. "The next trigger will be the earnings numbers from Infosys and other leading players," said Mr Rahul Rege, Senior Vice-President, Sharekhan. "We are seeing some amount of buying at lower levels."

The fall was steeper in the small-cap, mid-cap and bank indices. Mr Rege said Infosys results on Friday would set the tone for next week's trading.

Dealers said the higher margins to be enforced from next week forced foreign funds to liquidate holdings for the second day running on Thursday.

According to Sharekhan, only on two instances in the past did the market decline continuously for the second day, a day after a fall of over 300 points. (On April 28 and 29, 1992, the BSE Sensex fell by 570 and 222 points; and on May 14 and 17, 2004, the markets fell by 329.60 and 564.71 points.)