Sensex falls over 300 points on rupee, GAAR concerns

Equity benchmarks closed at their lowest levels in over three months as continuing concerns over the depreciating rupee and the likely wording of the General Anti-Avoidance Rule in the Finance Bill, triggered a sell-off. Weakness in European markets further aggravated the slide, with capital goods, banking and metal shares figuring among the worst performers.

The 30-share Sensex fell 320 points or 1.9% to close at 16831, and the 50-share Nifty closed at 5086, down 101 points.

A Reuters report today quoted Minister of state for finance S.S. Palanimanickam as saying that India was considering a review of the Double Taxation Avoidance Treaty with Mauritius as it was being widely misused by global investors to avoid paying tax in India. This too contributed to undermining sentiment, brokers said.

With today's fall, the Sensex and Nifty have breached their key support levels of 17,000 and 5100 respectively, and some technical analysts see this as a decisive downward move by the market.

Brokers say most of the negatives are only too well known, and that the downtrend over the last week is being caused by some of the weak bulls unwinding their positions, fearing a steeper fall.

For the week, the market is down around 2%, with banking and automobile and capital good being the biggest losers.