Bears return, Sensex falls 112 points

After last week8217;s sell-off, bears returned to Dalal Street with renewed vengeance on Monday. The day saw a fresh bout of selling pressu...

After last week8217;s sell-off, bears returned to Dalal Street with renewed vengeance on Monday. The day saw a fresh bout of selling pressure dragging down stocks sharply after a steady opening and early gains. The Sensex plunged 112 points, as investors booked profits amid worries about the dwindling inflow of foreign funds and the strengthening dollar.

While selling pressure was seen almost across the board 8212; encompassing power, telecom, automobile, tech, pharma, banking and cement blue chips 8212; mid-cap stocks continued to attract buying.

Up nearly 50 points in early trades, the 30-share Sensitive index Sensex eventually ended with a loss of 111.92 points, or 1.74 per cent, at 6,308.54. The broader 50-share NSE S038;P CNX Nifty index shed 33.50 points, or 1.66 per cent, to end at 1,982, coming off its day8217;s high of 2,025.90.

With this, the Sensex has now fallen by 5.79 per cent from the all-time-high level of 6,696 hit last week.

According to brokers, the market displayed volatility amid alternate bouts of buying and selling. 8220;With expectations of strong quarterly results from the corporates remaining high, the market opened steady and rose in early trades on selective buying. However, selling pressure emerged in blue chips, dragging down the market in the early afternoon,8221; said a BSE dealer.

Selling pressure 8212; largely from institutional investors 8212; intensified in the second half of the session dragging the market sharply lower. A correction was due after the recent run-up, and there has been a significant slowdown in foreign fund inflows.

There are concerns that foreign fund inflows may slow down amid fears of a possible hike in US interest rates. Foreign funds, which bought a record 8.5 billion in Indian equities in 2004, have slowed down their purchases of late amid the strengthening dollar.

Story continues below this ad

The BSE Sensitive index Sensex ended last week with a loss of 182.23 points, or 2.76 per cent, at 6,420.46, after touching its life-time high of 6,696.31 in intra-day trades on January 4. The broader 50-share NSE S038;P CNX Nifty index shed 65 points, or 3.12 per cent, to end at 2,015.50, after touching its lifetime peak of 2,120.15 on January 4.

Is the 388-point fall in the last one week enough for retail investors to enter and start buying again? 8220;The market will need some positive news to reverse the ongoing bearish trend. Therefore, investors should tread cautiously and a stock-specific approach is recommended,8221; said BSE dealer Motilal Oswal.