MUMBAI, June 10: Bears pulled down stock prices and indices as a host of problems like payment crisis faced by a section of brokers, fall in other Asian markets and selling pressure by foreign institutional investors (FIIs) gripped the stock markets once again. Sensex fell by 157 points on the Bombay Stock Exchange (BSE) as sustained selling pressure created a crisis of confidence. On the other hand, the rupee touched a historic low of 42.42 against the dollar before staging a smart recovery to close at a new low of 42.28 as nervousness continued to grip the inter-bank foreign exchange market. State Bank of India (SBI) averted another rupee collapse by selling dollars.There was panic sales on the stock markets as operators were worried by the fall in other Asian markets, especially Hong Kong, and reports of payment crisis on the BSE and the National Stock Exchange (NSE). ``Around half-a-dozen NSE brokers are reportedly facing payment problems following the sudden drop in prices,'' said a market source,adding, ``if the market doesn't pick up tomorrow, the payment crisis will lead to a big crash.'' Sensex closed at 3311.41 on the BSE and Nifty index fell by 32.15 points to 962.90 on the NSE.The market was flooded with rumours that the big bull who accumulated stocks of BPL, Videocon, Sterlite, Zee TV and others was facing severe payment problems. The big bull has reportedly unloaded heavily on the BSE and NSE to tackle the payment problem. Several other brokers who were operating in tandem with the big bull also faced a tough time and many of them were unable to execute their sale orders on the BSE and NSE.The steep fall in prices in the last one week had put many brokers in a financial mess. Market circles said financiers were reluctant to bail out brokers since the securities they can offer as guarantee are essentially the big bull's favourite stocks which have recorded considerable price erosion. The markets are now facing a crisis of confidence, several brokers said.Sensex had fallen by 480points after the presentation of the budget last week. Apart from FIIs, even local operators have been quitting the markets as there was a general feeling that the budget would not reverse the slowdown. Adding to the woes, the government has not announced any measure to boost the capital market.On top of this, absence of information from both the exchanges on the total exposure the defaulting brokers confused the market. ``The market was facing too much volatility of late. After the sanctions and downgrading, FIIs were also pulling out from the Indian markets. Investments will come only if stability returns,'' said a BSE director. FIIs had, in fact, sold shares worth over Rs 500 crore in the first week of June.In the forex market, opening at around 42.25/30 per dollar - modestly lower from the overnight finish of 42.22/24 - the rupee plunged to an intra-day low of 42.42/45 on continued demand for dollars from banks. The rupee, however, later recovered lost ground on dollar selling by companies andhovered at around 42.30/35 for the better part of the day's business. Towards the fag end, SBI renewed its active dollar sales and with other banks unwinding long dollar positions, the rupee initially rallied to 42.26/29 and then settled at 42.24 There was dollar sale of nearly $ 100 million during the day. The forward premium on dollar hovered at 9-10 per cent band on Wednesday, indicating the possibility of another steep depreciation in the future.
