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This is an archive article published on May 18, 1999

Sensex plummets by 225 pts in intra-day session

MUMBAI, MAY 17: The stock markets across the country showed volatile movements on Monday, ending the two-week long dream rally in stock p...

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MUMBAI, MAY 17: The stock markets across the country showed volatile movements on Monday, ending the two-week long dream rally in stock prices. With a host of factors like fears of a hike in US interest rates, political developments and the fall of Asian markets hitting the sentiment, the Bombay Stock Exchange Sensitive index (Sensex) plummeted by a whopping 225 points in the intra-day session but recovered later to close with a loss of 36 points.

Markets are concerned over the fact that with the inflation in US at its highest in nine years, the US Federal Reserve which is meeting on Tuesday to consider interest rates would probably increase the rates by around 50 basis points. According to market observers, this should see money flowing into the bond markets with higher yields, diverting money away from the equity markets.

Indian paper on the GDR markets witnessed a sharp fall in the mid-session on Monday. The GDR index shed 2.94 per cent at 749.52 over its Friday’s close on Monday. The fall in the GDRmarkets was led by MTNL, Reliance and L&T. The MTNL GDR dropped by 6.35 per cent at $ 9.95, while VSNL lost 2.125 per cent. State Bank of India, which had led the recovery in the Indian markets on Monday, however held steady losing about 0.65 per cent. Reliance GDR prices witnessed a sharp fall of 4.31 per cent in the mid-session trading. L&T was down by 4.63 per cent.

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FII investments are expected to slow down in the coming days following the meltdown in foreign markets witnessed on Monday. The sharp fall in international markets was triggered by fears of the Fed hiking interest rates. After this break, fund managers, brokers and analysts expect a resurgance of FII investments. In the event of the rate hike coming through, the flow of foreign funds to the Indian markets is likely to be affected. FII fund allocations will be disturbed by the realignment of the rates that will follow. Till the realignment is completed, FIIs are unlikely to pump in huge funds in the Indian markets.

On Monday, after Sensexcrashed by 225 points, FIIs re-entered the market towards the end and helped recover part the lost ground. Initially, investors cornered shares from all the sectors hoping that FIIs would make purchases as in the past three weeks. However, investments from these funds were affected with the new development and these funds sold heavily to reduce their positions. Investors were caught on the wrong foot and sold heavily.

Operators said there was all-round selling by Indian institutions and mutual funds at the peak level in the scrips of Tata Tea, Asian Paints, Raymond, Hindustan Lever and SBI. Software and pharma counters suffered again on sustained institutional selling. However, banks and fertiliser scrips evoked good response from investors.

The total volume dropped to Rs 1805.77 crore against last Friday’s turnover of Rs 2138.41 crore. ITC was the most active scrip with a volume of Rs 199.77 crore but the scrip dropped by Rs 20 to Rs 1098 on profit-taking. Reliance lost by Rs 5 to Rs 179, PentafourSoftware by Rs 39.10 to Rs 1093, Satyam Computer by Rs 43 to Rs 1430, Hindustan Lever by Rs 45 to Rs 2240 and Telco by Rs 5.05 to Rs 192. SBI, however, hardened by Rs 18.35 to Rs 248.10.

FIIs invest Rs 1,484 cr in May

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MUMBAI: Foreign investors poured in another Rs 296 crore into Indian equities on Friday taking the total to Rs 1,484 crore during May. The net investments last Friday came on top of Rs 276 crore the previous day. During the last three days of last week the net FII investments added to a whopping Rs 759 crore. Since the beginning of January, FIIs have brought in Rs 3,490 crore so far.

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