Sensex nosedives by 95 points

The session started on a subdued note and the 30-scrip Sensex dropped from the day8217;s high of 4813.73 to 4720.19, before closing at 4729.73, showing a sizeable loss of 94.71 points from the previous close of 4824.44. The BSE-100 index too dropped by 43.01 points to 2110.23 as against the previous close of 2153.24.

The other stock exchanges also followed a similar path. The Samp;P CNX Nifty index of the National Stock Exchange NSE opened at 1412.05, touched the day8217;s high of 1430.80 fell to the day8217;s low of 1397.70, before closing at 1410.70, showing a net loss of 1.30 points from the previous close of 1412.00.

Brokers said heavy margins imposed by the BSE restricted business activity and there was no fresh buying by local operators. Barring Satyam and Infosys, most of the counters witnessed selling pressure. Reports that country8217;s export growth came down to a meagre 2.11 per cent in July after recording double-digit growth rates for earlier two successive months and rising oil imports for April-July quarter in dollar terms were other dampening factors, they said.

Punters continued to lighten their overbought outstanding positions for the second consecutive day in the wake of strict measures taken by the BSE authorities to curb volatility in share prices. The total volume of business nosedived to Rs 1459.53 crore from Rs 2059.87 crore recorded yesterday.

However, FIIs who have once again turned net buyers on the exchange over the last three days. On Wednesday, when speculative unwinding on the markets resumed, FIIs ended the day with a net purchase figure of Rs 48 crore. 8220;With the market losing over 170 points in two days, FIIs are expected to step in selectively, which may not necessarily reflect in a rise in the Sensex,8221; said a broker.

8220;With the Sensex 5000 euphoria giving way to caution and panic, bears are now tightening the grip,8221; said a fund manager, adding, 8220;expectations that the Congress party would strengthen its tally in northern states which would have major impact on the formation of a stable government affected the sentiment.8221; Dealers said the market wants stability in the country and will always react negatively if there are chances of a hung parliament.

The imposition of new margins dampened the spirit of bulls. In a bid to bring down volatility on the stock markets, the BSE had on Monday imposed additional carryforward margin of 15 per cent if the gross outstanding position in a scrip exceeds Rs 200 crore or the net outstanding position exceeds Rs 150 crore.

This margin was slapped after the SEBI alerted the exchanges about the volatility. Currently, the exchange imposes additional carry-forward margin of five per cent if the gross outstanding exceeds Rs 100 crore or the net position exceeds Rs 80 crore. The rate is 10 per cent if the gross and net positions exceed Rs 140 crore and Rs 100 crore respectively.

Something wrong, says Manmohan

NEW DELHI: Former finance minister Manmohan Singh today said that sounding of alarm bells by the Securities and Exchanges Board of India SEBI over the current bullish trends indicated that 8220;something is wrong8221; with the stock markets.

8220;I do not want to sound an alarm as this could effect the investors sentiments,8221; he said adding that SEBI was already monitoring the situation.

Singh asserted that he was not responsible for the securities scam of 1992. The scam was on for three to four years including when Yashwant Sinha was the finance minister in the Chandrashekhar government. All his government did was to detect in 1992 the scam that had been taking place for the previous three or four years. 8220;We acted immediately to put in place a regulatory mechanism and order a JPC probe,8221; he told reporters.