Bulls on retreat, Sensex closes 390 pts down

Fear of weak monsoon and possible restrictions on lending did the damage

Bulls on retreat, Sensex closes 390 pts down


The stock market was volatile and it drifted lower in early trade as weak Asian stocks and lower US index futures triggered profit taking after a recent strong rally.  As the traders scrambled to unwind positions, key benchmark indices like Sensex and Nifty fell below 15,500 and 4,600 levels respectively.

Signs of recovery
Even though there are signs that the Indian economy is recovering from a slowdown last year but the big spoiler was weak monsoon.

The sharp slide in the day took place after television reports at the fag end of the trading session that the monsoon rains were 66 per cent below normal in the week to August 5, 2009. The popular Sensex at BSE lost 389.80 points or 2.45 per cent to close at 15,514.03. The S&P CNX Nifty was down 108.65 points or 2.31 per cent to settle at 4,585.50.  This index slipped to a low of 4559.20 from a high of 4718.15 points.
Nifty August 2009 futures were near spot price at 4585.10, while turnover in NSE’s futures & options (F&O) surged to Rs 73,819.40 crore from Rs 63,729.03 crore on Wednesday.

Mid-cap index
The broader market too ended on a weak note with the BSE Mid-cap index down by 2.39 per cent and the BSE Small-cap index declined by 1.29 per cent, yet both these indices outperformed Sensex.
BSE clocked a turnover of Rs 7139 crore, which is higher than Rs 6010 crore on Wednesday. The market breadth, indicating the overall health of the market, turned weak with as many as 1072 shares on BSE advanced as compared with 1617 stocks that declined and a total of 71 scrips  remained unchanged.  From the Sensex pack, 28 scrips fell while the rest gained.

Global markets
Meanwhile during the day at bourses abroad, European shares rose with key benchmark indices in France, Germany and UK were up by between 0.76 to 1.26 per cent.
Asian stocks too rose as key benchmark indices in Hong Kong, South Korea, Taiwan and Japan rose by between 0.3 to 1.97 per cent but China’s Shanghai Composite index was down 2.11 per cent led by financial companies.Indian stocks plunged because of the speculations by the  commodities producers,  that the  central bank will rein in lending to avert bubbles in equities and property.

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