Stock indices crash over global growth pangs

Sensex lost 371 points, Nifty 112 points

Investor sentiment in D-Street has been weighed down adversely by weakness in global stocks and also by data showing sustained selling by foreign funds this month. After three days of relative calm this week the NSE Nifty closed below 5000 for the first-time since June 2010. It lost 112 points or 2.22 per cent to settle at 4,944 while the BSE Sensex also lost 371 points at the close of the day’s trade.

Global cues
“The sharp sell-off in the Indian markets came as a surprise as the global cues were not very negative. The markets opened in the positive zone but soon slipped into the red led mainly by banks. Banks came under selling pressure on concerns over damage to asset quality given significant exposure to the infrastructure sector,” said Kotak Securities Vice President Sanjeev Zarbade.

The BSE Sensex tumbled 2.2 per cent to close at settle at 16,470, its lowest closing level since May 26, 2010. Frontline IT stocks were down between 3-4 per cent mainly on the back of expectations that the developed world is slipping into recession.

Morgan Stanley slashed its global growth forecast for 2011 and 2012, saying the US and the euro zone were “dangerously close to a recession.”

“The participation from retail investor is absolutely thin but the fund investors are also remaining cautious, generating cash in the portfolio,” said KR Choksey Shares & Securities chief Deven Choksey, who advised his clients to “stay in cash as long as market under pressure.”  The market breadth was quite weak with as many 2,200 shares fell on BSE and 669 shares rose, while a total of 96 shares remained unchanged.

Broader indices wise, the BSE Mid-Cap index declined 2.05 per cent, while the BSE Small-Cap index fell 2.62 per cent.  The total turnover on BSE amounted to Rs 2229 crore, lower than Rs 2369.48 crore on Wednesday. In retrospect, from a recent high of 18,871.29 on July 25, 2011, the Sensex has tanked 2,401points or 12.72 per cent in seventeen trading sessions.