Sensex slumps 124 points on political worries

Indian stock markets witnessed heavy selling pressure for the second straight day Wednesday, with a key  index losing 124 points due to political uncertainties as the DMK, an important partner of the ruling UPA, pulled out from the government.

The 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE), which opened in the positive at 19,026.46 points, ended the day at 18,884.19 points, down 0.65 percent or 123.91 points from its previous day's close at 19,008.10 points. 

The Sensex slumped to a low of 18,836.77 points in the intra-day and touched a high of 19,028.09 points. The benchmark Sensex had slumped 285.10 points Tuesday. 

The wider 50-scrip S&P CNX Nifty of the National Stock Exchange (NSE) slumped 0.90 percent or 51.55 points at 5,694.40 points. The Nifty had lost 89.30 points Tuesday. 

The markets witnessed nervous trading Tuesday after the DMK, which has 18 members in the Lok Sabha, announced its decision to pul  out of the UPA and quit the government over the issue of genocide of Tamils in Sri Lanka.

The Reserve Bank of India's (RBI) cautious stance on monetary policy also dampened sentiments at the markets. 

In a mid-quarter review of the monetary policy for the current fiscal, the RBI cut its short-term lending and borrowing rates by just 25 basis points and left unchanged the reserve ratios that also control money available for auto, home or commercial loans.

There was heavy selling pressure in realty, power, banking and PSU stocks. The BSE realty index tumbled 4.67 percent. Power index slumped 2.65 percent, PSU index fell 2.37 percent, banking index went down 2.10 percent, and capital goods index closed 2.04 percent down. 

Major Sensex losers were: Bharti Airtel, down 4.18 percent at Rs.281.15; SBI, down 3.87 percent at Rs.2,117.75; NTPC, down 3.43 percent at Rs.139.35; ICICI Bank, down 2.85 percent at Rs.1,001.60; and Hindalco Inds, down 2.80 percent at Rs.90.40.

Only 11 of the 30 Sensex scrips closed in the positive. Hindustan Unilever, up 3.37 percent at Rs.468.70; Tata Motors, up 1.51 percent at Rs.285.80; Cipla, up 1.47 percent at Rs.388.90; TCS, up 0.78 percent at Rs.1,557.10; and Tata Power, up 0.66 percent at Rs.98.50 were among the major Sensex gainers.