Sensex tumbles on global cues

A steep fall in the US equities dealt a severe blow to domestic stocks on Monday, rattled as they already were by the Budget announcements of last week.

The 900.84-point fall of the Sensex on Monday ranked next only to its highest fall ever of 1,408.35 points less than a month ago, on January 21.

(The January fall too, was occasioned by a slide in the global markets in the middle of a huge liquidity crunch in the domestic market following the Reliance Power and Future Capital IPOs.)

The Sensex registered a sharp fall of 5.12 per cent on Monday, dipping below the 17,000-mark to close at 16,677. The Nifty closed below the 5,000-mark at 4,953, losing 5.18 per cent.

On Friday, the US markets had taken a big hit of more than 2.5 per cent; this weakness spread to the Asian markets, which tumbled on Monday. In Japan, the second biggest market in the world, the Nikkei fell 4.49 per cent.

“The Budget proposals have rattled many of the FIIs and arbitrageurs. The farmers’ loan waiver proposal for Rs 60,000 crore without making any provision in the Budget puts a question mark on where the funds will come from,” said Mr Amitabh Chakraborty, President-Equity, Religare Securities.
FIIs net sellers

On Monday, FIIs were net sellers of equities for Rs 711.31 crore as per the combined BSE and NSE data. The domestic institutional investors remained on the sidelines, and were net buyers for a mere Rs 80.47 crore.

Both public and private sector banking stocks were hit badly in Monday’s trade.

“Investors are not convinced how the money will come for the waiver. Once the Government clarifies this, the PSU banks’ scrips may recover,” said Mr S. Muhnot, Managing Director & CEO, IDBI Capital Market Services.

Among the sectoral indices, the BSE Bankex, predictably, lost the most, declining 6.72 per cent. [Punjab National Bank (9.65 per cent), SBI (8.83 per cent), Canara Bank (7.98)].
RUPEE FALL

The rupee fell by 36 paise against the greenback on Monday tracking the weakness in the domestic stock market and dollar demand from nationalised and foreign banks.

The home currency opened at 40.15/16 and ended the day at 40.38, down from the previous close of 40.02.

Foreign exchange dealers said there was a cash-dollar shortage in the spot market which pushed up the demand for dollars.