Markets go into a tailspin

Mumbai: The BSE Sensex opened on 17 September at 2758.16 and touched a near eight-year low of 2640.58 before closing for the day at 2680.98, a net fall of 149.14 points or 5.27 per cent. The lowest level seen by the Sensex prior to this was on 29 January 1993, when it closed at 2680.79.

The National Stock Exchanges S&P CNX Nifty Index lost 5.16 per cent (47.45 points) to close at a 32-month low of 872.25.

Stocks like Moser Baer, Hughes Software, CMC Ltd, Polaris and Global Telesystems, all technology stocks, hit the 20-per cent lower circuit, while ACC, Infosys Tech, NIIT, Satyam Computer and SBI were locked in a 10-per cent lower price band before closing for the day. In the specified group, 169 including 28 index-based counters, registered considerable losses.

Since the past one week or more, FIIs have been net sellers of Indian stocks worth around Rs 200 crore. Of this, on 14 September, the FIIs sold Rs 278.70 crore and bought Rs 168.90 crore, resulting in a negative net investment of Rs 109.80 crore on just one day (September 14).

This is nothing but panic and redemption-based selling, said an executive of a top US-based fund major on condition of anonymity.

The US government and the Securities and Exchange Commission (SEC) are expected to give directions to their local players as well as the FIIs as soon as the US markets start functioning.

After the aerial attacks on 11 September, most US-based funds operating in India have been asked to stay liquid and keep more cash than equity stocks, it was learnt.

Coupled with the possible downslide in the stock prices in majority of the equity markets of the world, it is but natural for the fund managers to keep more cash than equity, said an operator on the equity desk of a leading FII.

The finance ministrys move on 16 September to take steps to boost the markets by hiking the FII investment limit and look at the possibility of introducing margin trading had little impact on the overall sentiment.