Scrips take a free fall on rate hike fears

Scrips take a free fall on rate hike fears

Scrips take a free fall on rate hike fears

With this, the market declined for the fifth straight day. Data showing substantial selling by foreign funds on Friday and media reports that the proposed Goods and Service Tax (GST) will not be rolled out before April 2012 due to continued parliamentary disruption, also unnerved investors.

Also, global stocks fell on rising pressure on Portugal to seek financial help to prevent the debt crisis contagion.

From a seven-week closing high of 20,561.05 on January 3, 2011, the Sensex has lost 1,336.93 points or 6.5 per cent, in five trading sessions.  The market breadth was weak as the index heavyweight Reliance Industries slumped over 3 per cent, while another index heavyweight Infosys rose close to 1 per cent ahead of its Q3 December 2010 earnings on January 13.

Interest rate sensitive sectors led the day’s market tumble. Banking & financial stocks declined on concern higher deposits rates may impact banks’ net interest margins, thereby hurting profitability. Realty and auto stocks, too, fell.

The market was volatile and all the sectoral indices were in the red. NSE’s volatility index, India VIX, a gauge of traders’ perception of near-term risks in the market based on options prices, surged to 23.16 per cent from Friday’s close of 20.82 per cent.

Foreign institutional investors (FIIs) sold shares worth a net Rs 964.60 crore on Friday, much higher than an outflow of Rs 213.80 crore on Thursday last.  FII inflow in January 2011 totaled Rs 552.70 crore, while it had bought equities worth Rs 2049.60 crore in December 2010.

The BSE 30-share Sensex was down 467.69 points or 2.38 per cent to close at 19,224.12, its lowest closing level since 26 November 2010. The index lost 533.38 points at the day’s low of 19,158.43 in late trade, while it rose 28.62 points at the day’s high of 19,720.43 in early trade.

The S&P CNX Nifty was down 141.75 points or 2.4% at 5,762.85, its lowest closing level since 26 November 2010.