Nifty ends 85 pts lower on Eurozone debt fears; SBI dips 4%

The benchmark Nifty witnessed huge selling pressure in the second half of trade - especially after European markets opened. The Index closed the session below 5100 mark. Even the Sensex also shed 271 points to close below psychological 17000 level. The markets had been consolidated since Tuesday to till today's afternoon trade.

European markets were down 1.5-3%, at the time of closing Indian equities on speculation that fiscal austerity in some euro zone countries may stifle economic growth. The Euro was trading near 14-month low as against dollar. Even crude oil prices also slipped to USD 72.92 a barrel, down by USD 1.48. On Monday, European Union and IMF had announced USD 1 trillion bailout package for Eurozone countries (especially PIIGS (Portugal, Italy, Ireland, Greece and Spain)), which are facing debt problem. All global markets rallied sharply on this news on Monday. But investors remained doubtful about implementation of this package and whether these countries can be able to solve their problem with this package.

With its USD 1 trillion rescue package from the International Monetary Fund (IMF) and the European Union, Europe may have managed to dodge the bullet, but the problems are not yet over, says Russell Napier, Strategist, CLSA. ''The ECB wants parts of Europe to deflate. However, deflation, both politically and socially is impossible,'' he says.

There has been a face off between the ECB and the European governments, he says, adding that the crisis could have been as big as Lehman. However, now, the risk is much lower than last week.

The 30-share BSE Sensex closed at 16,994.60, down 271.27 points or 1.57% and the 50-share NSE Nifty fell 85.40 points or 1.65% to settle at 5093.50. The Nifty May future ended with 24 points discount, as per provisional data. 

Almost all major sectoral indices dragged the markets down. The BSE Metal Index tumbled 3.5%. Realty, Oil & Gas, Bank, Capital Goods, Auto and IT indices declined 1-2.5%.