Sensex spirals down, slips 268 pts

Continuing its downward spiral the Sensex today lost 268 points as market participants rushed to square off their positions on the back of hike in the margins by the NSE.

Continuing its downward spiral the Sensex today lost 268 points as market participants rushed to square off their positions on the back of hike in the margins by the NSE.

A weak trend in the Asian markets further aggravated the situation. After a firm start at 11,943.08, the Sensex 30-share index later turned week and touched the day8217;s low of 11,621.61 before ending at 11,646.78, a net fall of 268.46 points or 2.25 per cent.

Mid-cap and small-cap stocks also dipped following a widespread correction. While BSE8217;s Mid-cap index lost 1.34 per cent and closed at 5596.88, the Small-cap index lost just 0.34 per cent and closed at 5065.44 points.

In all, the market barometer lost 383 points in the first two trading session of the week and erased Rs 45,715 crore from the market capitalisation. 8220;Stung by the NSE decision to hike margins in derivatives and cash segments with effect from Thursday which is the new trading day, market men have been unwinding their positions. The correction could continue tomorrow,8221; said Shahina Mukadam head of research, IDBI Capital.

Impact of the margin hike was such that even a fall in the global crude prices could not uplift the sentiments. The broader S038;P CNX Nifty of the National Stock Exchange NSE closed at 3,462.65, down 86.25 points.

Dealers opine that a correction was always in the offering as the markets had witnessed a very speedy run-up in the recent past and a hike in the margin only acted as a catalyst. 8220;Investors squared off their positions with the hike in the exposure margin limit. Short-covering with the contract expiry just round the corner was also visible8221;, said a dealer from a domestic brokerage.

Selling was visible across-the-board with 28 of the 30 Sensex stocks losing ground as the index lost more than 2. Cipla Ltd, Tata Steel, Tata Motors, NTPC and Tata Power all lost in the range of 4-5 each.

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ACC, Maruti, Grasim Industries, REL, HLL, TCS, ITC, L038;T, RIL and Bajaj Auto also closed in the red. FIIs were net buyers in the cash market on Monday at Rs 194.80 crore. In the F038;O segment, they were net sellers at nearly Rs 1,300 crore.

The turnover was lower on BSE and NSE at Rs 4,587.75 crore and Rs 9,135.33 crore, respectively.