Sensex slammed again as global rout continues

The Indian equity markets continued to suffer badly from the aftershocks of turmoil in the US and European markets. The S&P's downgrade of the US top rating spooked global markets, sending investors scurrying for cover. The trading was also volatile with the indices recovering in the afternoon before turning lower again.

The NSE Nifty fell by almost 100 points, kicking off the week on a sour note after last week's ~5% drop. Although there was a pull-back, which saw the Nifty bounce back to 5200 levels, the recovery could not be sustained as the the Dow Jones stock futures and European markets tumbled anew. Several reassuring statements from the Government and the RBI were of no help.



Finally, the BSE Sensex ended at 16,990 losing 315 points. It had earlier touched a day's high of 17,247 and a day's low of 16,759. It opened at 16,907.

The NSE Nifty closed at 5,119 losing 93 points.

FIIs have turned net sellers in the Indian equity markets. They have sold nearly Rs. 30bn (provisional) in the last four trading sessions in the cash segment, while selling Rs. 25bn in index futures and Rs. 4.3bn in stock futures.

Today’s decline was mainly led by a selloff in Realty, IT, Telecom and Metals stocks. Power and Banking were other notable losers. Overall, the trade was highly negative with all the sectoral indices ending in the red. The Mid-Cap and the Small-Cap indices also witnessed heavy offloading.

Technically, on the monthly charts, the Nifty seems to have found support around the ascending trendline of 5000 levels; any close below the same could aggravate the selling pressure.

"For the week, one must keep an eye on the Federal Reserve's policy meeting and Chinese data on Tuesday. For India, the IIP data on Friday will be a key moniterable apart from the remaining quarterly earnings and any possible announcement from the Government's side.

Markets will remain volatile as the overseas situation remains fragile. Further correction in crude oil and other commodities will have a dampening effect on inflation in India," says Amar Ambani, Head of Research, IIFL - India Private Clients.