Sensex sinks on global selloff...Nifty holds 200DMA

The F&O expiry week started off on a very negative note, with the NSE Nifty index closing almost near a day’s low. Today’s decline could be attributed to a sell-off across global equity markets. Markets opened gap down, tracking weakness in the Asian markets amid concern about Spain’s worsening fiscal health and fresh trouble for Greece. All-round selling in scrips across sectors dragged the BSE Sensex below the 17000 mark. However, the Nifty just about managed to end above 5100, which is also the 200DMA for the index. The Sensex ended at 16,877, down by 281 points, or 1.65% from the previous close. It had earlier touched a day’s low of 16,849 after opening at day's low of 17,047. The NSE Nifty settled at 5118, down 87 points or 1.7%. It touched a day’s low of 5,108 and day’s high of 5,164. Maruti, JP Associates, Sesa Goa, Sterlite, Hindalco, IDFC, Tata Steel, GAIL, Reliance Infra and BHEL were the notable losers on the Sensex and the Nifty today. Only Dr Reddy’s Lab’s, Cipla and ONGC were among the gainers on the Nifty. The INDIA VIX on NSE shot up by over 10% to close at 18.66. It hit a day’s high of 18.67 and a day's low of 16.89. The market breadth on the BSE was negative, 1794 stocks declined and 990 stocks advanced. On the BSE-500 index, Peninsula Land, Shree Global TradeFin, JM Financial, Puravankara Projects and Bajaj Finance were the top gainers. Crompton Greaves, Pantaloon Retail, HDIL, HSIL, IVRCL, Godrej Industries, Maruti Suzuki, Shriram City Union Financial, GVK Power, Allcargo Logistics, United Breweries, Sterlite Industries and Simplex Pharma were the top losers. European stocks extended Friday's big losses into Monday's trade, with Spanish equities and bonds pacing the fall, amid mounting fears that the eurozone's fourth largest economy will need a sovereign bailout along the lines of Greece, Portugal and Ireland. The IBEX 35 index in Spain was down ~4% while the FTSE MIB index in Italy plunged ~5%. The main stock indices in Germany, the UK and France were down ~1.5% to 2%. The Athens General Index plummeted 6.2%. Yields on 10-year Spanish government rose to 7.46% while yields on 10-year Italian government bonds climbed to 6.41%. The ECB said that it will stop accepting Greek sovereign bonds and other assets backed by the country’s government as collateral. Reports also said that the IMF may stop giving aid to Greece. International lenders arrive in Athens to push for further cuts needed for the debt-laden country to qualify for further rescue payments and avoid a chaotic default. On the currency front, the euro weakened to the lowest level against the dollar since June 2010 today. The Euro fell below lifetime average against the US Dollar. The euro was trading below US$1.21 while the dollar index is above 83. The Indian rupee fell to a one-week low, pressured by weaker regional currencies and stocks, after the euro slumped against major global currencies on mounting worries about Spain's fragile fiscal health. The dollar jumped against most other major currencies, while crude oil and other commodities declined, as investors unloaded risky assets amid mounting concern about the eurozone sovereign debt crisis and its adverse impact on the global economy. "The undercurrent is fragile amid fresh trouble for the debt-strapped eurozone and growing concern about slowdown in China. There are also doubts about the Indian Government's ability to push through pending reforms amid persistent opposition from various political parties. Stubbornly high inflation, rising twin deficits, a weak currency, below-average monsoon and low investor confidence are among the other pressure points for the Indian markets," said Amar Ambani, Head of Research, IIFL. "Back home, the focus will be on New Delhi, now that the Presidential election is out of the way. The Congress-NCP tension is in the spotlight amid reports of an impending Cabinet reshuffle. The Centre will find it tough to act on pending reforms amid continued opposition on sensitive issues like diesel decontrol and FDI in multi-brand retail. Few parties, including SP, have written to the Prime Minister not to go ahead with FDI in multi-brand retail, according to reports," he said. "Monsoon deficit remains an even bigger problem as inflation continues to be sticky while the twin deficits too remain elevated. The Indian indices will remain largely rangebound and choppy before the F&O expiry on Thursday," said Ambani. Asian stock indices finished sharply lower, as fresh concerns emerged over Spain's fast deteriorating financial condition. Worries over deeper slowdown in China and renewed concern over the fate of Greece within the euro area also dampened the sentiment. The MSCI Asia Pacific Index lost 1.9% to 114.48 as of 5:20 p.m. in Tokyo, erasing last week’s advance. All 10 industry groups on the gauge ended lower and 10 stocks dropped for each that gained. The index was headed for a two-day loss of 2.6%, the biggest since June 4. The Nikkei in Tokyo lost ~1.9% while the Shanghai Composite Index lost 1.2%. The Hang Seng in Hong Kong dropped ~3%. The Kospi in South Korea slipped ~1.8%. The Straits Times index was down ~1.1% while the Taiex in Taiwan dived ~1.9%. The S&P/ASX 200 index shed 1.7%. US stocks closed at session lows on Friday, with the main indices erasing monthly gains on trepidation about Spain’s precarious fiscal condition. Wall Street investors will watch out for fresh signs of a slowdown this week, as they digest more earnings and economic reports.