Sensex crashes by another 112 points

During the closing hours of Friday8217;s trading, strong rumours were floating around about a hike in interest rates, and this took the Sensex below the 4500 mark. For Monday, the weak undertone would continue, feel market players. And to add to the market8217;s negative undertone, Sebi8217;s FII investment figures for Thursday has shown a net outflow to the tune of Rs 388.7 crore. Beginning last Friday, FIIs have been net sellers in the Indian equity market, but had given a positive figure of Rs 180 crore for Wednesday.

Technical analysts too see another slide from the current levels as the Sensex has only recently breached long-time trendline which was around the 4650 level. Brokers are taking a pessimistic view of the rate hike by the RBI and expects the market to go down drastically in the short run. The broking community is sceptical that the borrowing costs of the corporates will go up and that will affect the bottomline.

Values opened strong in the morning, and managed to remain firm in the first half. However, during the second half, as a result of huge selling pressure, values took a sharp dip. The fall was extremely sharp in software stocks, and a large number of software stocks showed a negative close. Wipro, Pentamedia, Zee Tele, and Dig Equipment were major losers. Meanwhile, the sentiment for the non-software stocks was equally bearish. Tisco hit the lower circuit, and lost more than 8 per cent. The drop in ITC, SBI, and Reliance was also equally significant. HLL, Ranbaxy, Dr Reddy, ACC, and Lamp;T also showed negative closes.

With this fall, Sensex has now declined by nearly 400 points in the last five sessions. 8220;The RBI move was completely unexpected. The hike in bank rate and CRR will push up the borrowing costs of companies. This will have an adverse impact on their bottomlines,8221; said an analyst.

Commenting on the continuous fall in share prices for the fifth consecutive day, BSE president Anand Rathi said, 8220;fund which accumulated positions in some scrips in the last couple of days have reportedly unloaded heavily in these counters to book profit, which put severe pressure in the market.8221; Since today was the last day of current weekly settlement, players preferred to square of their positions in view of bearish outlook, added an analyst at a leading broking firm.

Meanwhile, the fall in the rupee value against US dollar added fuel to the persisting bearish trend in the market with players postponing their purchases. Marketmen expect the Sensex to fall by another 200-300 points in the coming days.