Bull run halts; Sensex down 191 pts

MUMBAI, OCT 15: The bull rally came to an abrupt halt on Friday as stocks crashed on sustained selling pressure triggered by dumping of h...

MUMBAI, OCT 15: The bull rally came to an abrupt halt on Friday as stocks crashed on sustained selling pressure triggered by dumping of huge accumulated positions by operators. The Bombay Stock Exchange Sensitive index (Sensex) plunged by 191 points, or 3.77 per cent, in panic like conditions created by unwinding of positions triggered by the developments in Pakistan and Finance Minister Yashwant Sinha’s concern over the fiscal situation.

Dealers said speculators were booking profits on gains after a rally that took share prices nine per cent higher in the last ten days. "The market was over extended. The developments in Pakistan could be unnerving the market and causing the position-squaring," said a dealer. A BSE release ruled out that it has asked members to reduce their outstanding positions. However, the BSE statement failed to stem the rot as share values continued to bear the brunt of selling by operators.

Sensex (BSE sensitive index) crashed from the day’s high of 5095.26 to 4866.85 before closingat 4884.04, showing a sizeable loss of 191.37 points from the previous close of 5075.39. The BSE-100 index also moved down by 82.13 points to 2302.04 as against the previous close of 2384.17.

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The sharp fall was also due to reports that emergency was declared by the army chief Parwez Musharraf in Pakistan and finance minister Yashwant Sinha’s reported concern over internal debt and fiscal deficit in his first media brief after taking over the portfolio. “Worries over the situation in Pakistan after the army declared an emergency early Friday morning accelerated the unwinding. Tough measures, including cut in expenditure, proposed by Sinha also hit the rally,” brokers said.

“Rumours that authorities have asked brokers to cut their speculative positions in view of surge in outstanding positions dampened the sentiment,” said BSE broker B V Shah. Marketmen were worried about reports that regulator SEBI was looking into huge outstanding positions accumulated by four leading exchanges in the country.Collective gross outstandings of four exchanges have crossed Rs 10,000 crore.

However, a BSE official said the market recorded a fall only because of squaring up of positions by players on the last day of the settlement. Brokers pointed out that they are not allowed to carry on positions beyond Rs 20 crore and most of the members were having huge outstanding positions.

The fresh buying was also restricted ahead of Monday’s account closure on the National Stock Exchange, brokers said. The NSE is closing its weekly settlement on Monday as markets are closed on Tuesday due to a festival holiday. “It was quite natural that what was bought by operators in the last a few days should be squared up at the end of the weekly settlement. This is only a technical correction. The market had gone up too far after the poll results were declared and Vajpayee government took over reins at the Centre,” said an NSE dealer.

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Besides squaring up of long positions, FIIs reportedly sold in several counters includingfavourites infotech and pharmaceutical shares. As many as 17 scrips, including index-based ITC and Ranbaxy from specified group, closed at the day’s lower circuit filter after exhausting the daily price limit. Atlas Copco and Reliance Capital, however, locked at the day’s upper price band. Only seven out of 153 traded specified scrips survived the bear onslaught and closed in the positive territory while 145 registered sharp to moderate losses and one remained steady. Moreover, 29 out of 30 Sensex scrips – except ACC – were remarkable losers.