Sensex falls 148 pts, closes below 4,000

ICE shares led the declines with heavyweight software firm Infosys Technologies delivering about 54 points of the index’s loss and 25 of 32 leading sector firms fell more than five per cent. Infosys, which has the second highest weightage of 14.38 per cent in Sensex, fell 9.20 per cent to end at Rs 5,864, its lowest level in 2000.

Zee Telefilms closed at a 7-month low of Rs 431, down 8.20 per cent and accounted for more than 20 points of the index’s fall. Among other big losers were Satyam Computer, down 8.0 per cent at Rs 2,676.40 and consumer products firm Hindustan Lever Ltd which was down 1.93 per cent at Rs 2,207.55. Engineering and cement conglomerate Larsen & Toubro dropped 12 per cent, hitting limit-down. It closed at Rs 183.95, its lowest level in over a year, as a 27 per cent slide in full-year net profit disappointed the market.

Electricity company BSES fell four per cent to Rs 244.85 as its price attempted to align to the Rs 234 a share open offer set by petrochemicals company Reliance Industries for hiking its stake to 35 per cent from the current 15 per cent. Reliance shares ended a marginal Rs 2.50 down at Rs 313.

Bucking the trend were shares of tobacco and hotels conglomerate ITC which rose 1.2 per cent to Rs 628.20 on hopes of a strong performance when it unveils its annual results on Wednesday.

Operators said the steep fall of nearly 148 points in Nasdaq Composite index last weekend mainly triggered off a fresh round of selling in IT sector stocks. The fall in other Asian stock markets – especially Tokyo and Hong Kong – too dampened the sentiment on the domestic market. FIIs were reluctant in creating any new positions on fears of further rise in US interest rate.

“The continuing turbulence in Nasdaq is taking a toll on ICE stocks. Many of the leading ICE stocks like Infosys, Zee and Satyam have fallen steeply. There are chances of further fall in ICE shares,” said an NSE dealer. Adding to the misery, retail investors and day traders are keeping away from the market.

Brokers said the spectre of further interest rate rises, both in the US And in local Asian markets, was a major factor in the generally pessimistic mood. “Things are looking sad all over the region, and what is driving that is (worries over) whether or not higher US rates flow through to the rest of us,” a senior dealer at a foreign brokerage said.

Analysts said technical indicators pointed to the index continuing to fall."The price line has moved down the long-term trend line. The index is below the 200-day moving average which is a bearish indication," said an analyst, adding, “Technically, the index might go down another 200 points.”

Analysts expect the index to break through 3,912 — the lowest intra-day low in 11 months hit last week — possibly as soon as Tuesday. “If that is penetrated we could see 3,725,” brokers said, adding, “We are into the second phase of a bear phase and one has to look at fresh bottoms.”