Sensex closes over 270 points down on European jitters

04 Feb 2010

The benchmark Nifty retreated on the back of profit booking and weak global cues. It lost over 80% of Wednesday's gain on selling across all the sectors; realty, metal, technology, telecom and auto were the major losers. Respective indices declined 2-4%.

Nitin Raheja, CIO at Rada Advisors said, "The markets will remain soft and trade in a narrow range. 4,600 is where we expect it to be an intermittent bottom for the market. However, If the budget turns out better-than-expectations then I would see markets rallying."

Asian markets, which rallied yesterday, started the day with negative bias. Hang Seng fell 1.3% and Straits Times lost 0.7%. Shanghai, Jakarta and Nikkei declined 0.3-0.46%. Kospi and Taiwan closed flat. European markets also slipped in the red after flat opening. CAC, DAX and FTSE were trading 0.6-0.8% lower, at the time of closing of Indian equities. The US index futures were down 0.4-0.5%.

The markets broke the 4900 mark in the afternoon trade, especially post 2:30 pm because Greece, Portugal, Spain Sovereign credit default swap (CDS) gained sharply. Greece's 5-year Sovereign CDS was up 17 bps to 414 bps. In the last week, there was news that cost of insuring against a sovereign-debt default rose for Greece, Portugal, Spain and Italy. Portugal's reported a higher-than-expected budget deficit of 9.3% of GDP in 2009.

Moody's said Portugal budget revealed challenge ahead. Greece budget deficit was at 13% of GDP, more than four times the EU's limit.

The 50-share NSE Nifty cracked the 4850 as well and fell 1.75% or 86.50 points, to settle at 4,845.35. The 30-share BSE Sensex closed at 16,224.95, down 271.10 points or 1.64%. The Nifty February future closed with 7 points discount.