Sensex Down 769 Points on Global weakness

The bears finally got their chance on Monday, pulling the key indices down around 4 per cent.

The broad based sell-off was triggered by weakness in stocks across the globe, but the intensity of the fall caught most market participants by surprise. National Stock Exchange’s Nifty closed down 270 points or 4.48 per cent at 5777, after slumping to an intra-day low of 5740.60. Bombay Stock Exchange’s Sensex slipped to a low of 19,177.19 and finally settled at 19,261.35, down 769 points or 3.84 per cent from Friday’s close. DLF (down 7.53%), NTPC (7.3%), (5.81%), Tata Steel (6.15%) and Tata Motors (5.8%) were the biggest index losers. “A negative opening was expected given the weakness in US and Asian markets, but we did not expect such a drastic fall. With 5800 on Nifty broken, the short-term trend has now turned negative. If global markets are positive Tuesday, we could see a bounce back. If not, the selling will continue,” said DD Sharma, senior vice president at AnandRathi Securities. Likely FII sales, as a result of RBI’s latest diktat, could also have led to the fall, Sharma said. Reserve Bank of India on Friday widened the definition of stock market exposure and gave banks six months to bring down their exposure to equities. RBI told banks that the exposure will now include lending to mutual funds and payment commitments made to exchanges on behalf of MFs and foreign funds. BSE Midcap Index shed 3.87 per cent and Smallcap Index was down 2.91 per cent. The CNX Mid-cap Index shed 4.13 per cent and Nifty Mid-cap 50 dropped 5.12 per cent. Market breadth showed 1,944 declines and 995 advances on BSE, while on NSE 210 shares advanced and 1,007 declined. Traders also used declines to go short and wind up long positions in the derivatives segment. Nifty December ended at 4-point premium to the underlying, adding 40 lakh in open interest. “There was 11-12 per cent build up in open interest in Nifty December, indicating build up of shorts. However, some shorts were covered by the end of the session going by the 4-point premium to the spot. There was also liquidation of longs in several mid-cap counters. 5700 is now a crucial level to watch for. If that is broken Nifty December futures could fall to 5500,” said Ashish Chaturmohta, derivatives analyst at AnandRathi. Overseas, Japan’s Nikkei 225 shed 1.71 per cent to close at 15,249.79, Hang Seng ended down 3.51 per cent at 26,596.58, Straits Times Index fell 3.25 per cent to 3,353.56. UK’s FTSE 100 was down 1.59 per cent at 6,295.20, Germany’s DAX 30 declined 1.49 per cent to 7,829.78 and France’s CAC 40 was lower by 1.62 per cent at 5,514.41