Bears bounce back on D-Street

Weak IIP data,fall in global markets and Infosys outlook pull Sensex down 309 points.

Dalal Street was hit by the cautious outlook given by tech heavyweight Infosys,poor factory output show and weak global markets amid fears that the euro-zone debt crisis may spread to more countries.

The Bombay Stock Exchange Sensex which had lost 356 points in last two trading sessions,fell further to end the day at 18,411.62 down 309.77 points or 1.65 per cent a level last seen on June 27. The broad-based National Stock Exchange index Nifty fell 89.95 points to 5,526.15,after dipping below 5,500 level to 5,496.95 during the session.

Software exporter Infosys,which carries second heaviest weight on the Sensex,tumbled 4.27 per cent and was the top loser after it posted first quarter results and gave a bleak outlook contributing about 80 points to the fall. Foreign funds,which pulled out Rs 969 crore,led the selling exercise.

Chief investment officer of Kotak Mahindra Old Mutual Life Insurance,Sudhakar Shanbhag,said,The IIP reading of 5.6 per cent based on new series has again disappointed for the second month running and is far below expectation of over 8 per cent new series. The impact of interest rate increases over the past 15 months is reflecting in the moderated growth numbers. The degree of slowdown in growth would have implications on the RBIs rate increase plans.

Inflation numbers are expected to be higher in line with the May 2011 WPI of 9.06 per cent and hence it will be a challenging decision for further rate hikes to control inflation, he said.

Head of research,IIFL,Amar Ambani,said,For India,the key factor will be FII figures to check if the recent upswing has started reversing or not. June inflation report,due on Thursday will also have a sentimental impact on the market. Talking of micro,after Infosys muted results and tepid guidance,the market will await the earnings report from TCS.

Meanwhile,world markets were awash in red today,with stocks sliding as much as 3 per cent as investor sentiment was rattled by growing fears that European debt turmoil could spread into Italy and Spain.

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Concerns over eurozone debt crisis coupled with overall economic growth fears left stock markets from Tokyo to London deep in the red. Most of the Asian bourses,led by Hong Kong,closed in the negative territory,while European markets tumbled as much as 2 per cent in afternoon trade.

Hong Kongs Hang Seng index dropped over 3 per cent to close at 21,663.20 points while South Koreas Kospi index plunged 2.20 per cent to 2,109.73 points. Japanese benchmark Nikkei 225 index fell 1.43 per cent to 9,925.92 points.

Similarly,key indices in China,Singapore and Australia plummeted over 1 per cent. While efforts are continuing to tackle Greek debt crisis,the financial situation looks grim even for European economic heavyweights Italy and Spain.

Investors worldwide are worried that Italy and Spain might have to seek financial lifelines from European Union and the International Monetary Fund. With agencies