Sensex scales new peak, but crashes sans support


Mumbai : Despite scaling a new all-time peak, a key Indian equities index crashed over 700 points Thursday as foreign funds resorted to heavy sales, unable to hold on to the gains made midway into the trading session.

Support TwoCircles

At one point, the 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) was down as much as 944.66 points, but a minor rally helped it to stage a marginal recovery of some 200 points.

At close, the barometer index was ruling at 17,998.39 points, down 717.43 points or 3.83 percent over the previous day’s close at 18,715.82. As many as 23 scrips, that go into the basket of Sensex shares, ended in the red.

The closing level hardly reflected the fact that barely a few hours earlier the key index had touched a new all-time high of 19,198.66 points, gaining over 480 points.

Selling was witnessed in virtually every counter, especially energy, banking, cement, metals and engineering stocks, although some tech stocks managed to end with some gains, analysts said.

Two of India’s top three IT companies, Tata Consultancy Services (TCS) and Wipro Ltd, up led the gainers. The scrips were up 2.17 percent each at Rs.1,118.85 and Rs.496.45, respectively.

Other gainers among the Sensex shares were Cipla, Satyam Computer, Dr. Reddy’s Laboratories, Hindustan Unilever and Ranbaxy Laboratories.

Associated Cement led the losers, down 13.86 percent at Rs.1,036, followed by Reliance Energy, down 9.71 percent at Rs.1,591.35, State Bank of India, down 8.26 percent at Rs.1,677.45 and Bharti Airtel, down 7.67 percent at Rs.1,019.40.

The other losers included ICICI Bank, Hindustan Aluminium, HDFC Bank, Bharat Heavy Electricals Ltd, Larsen and Toubro, Reliance Industries, Tata Steel, Reliance Communication and the Oil and Natural Gas Corp.

The Sensex had crashed some 1,700 points early Wednesday on fears of a clampdown on participatory notes by the markets regulator but staged a revival of 1,400 points by close following assurances from Finance Minister P. Chidambaram.

Panic had set in early since the Securities and Exchange Board of India (SEBI) said Tuesday it could ask foreign funds to immediately cease issuing or renewing participatory notes to their clients for investing in stocks or derivatives.

Participatory notes are issued to overseas investors not registered with the regulator to buy shares through registered foreign funds. They are often seen as a means for backdoor entry for speculative and anonymous trading.