Sensex crashes another 438 points

SENSEX
17559.98
-438.41

NIFTY
5215.30
-135.70

Sensex crashes another 438 points:

MUMBAI: Foreign portfolio managers are frantically trying to put their house in order. The finance minister’s reassurance that FIIs may get more time to unwind P-Notes gave them little comfort. On Friday, FIIs continued to pare P-Note positions held in their sub-accounts, causing the Sensex and the Nifty to drop by over 2%. Both indices closed well above the day’s lows, but the sentiment continues to remain fragile. “The hitch is, unwinding the PN positions may not be as easy as it looks,” said a dealer at a foreign broking firm. “In many instances, FIIs holding the underlying shares have lent them to other players for a fee, or spun off additional products from those shares to earn higher commission. Some FIIs have even been using those shares for trading in their proprietary accounts,” the dealer said.

Meanwhile, at a seminar in Mumbai, HDFC chairman Deepak Parekh defended the proposed curbs on PNs on the grounds that a lot of unregulated money was coming in. According to provisional data on BSE, FIIs net sold Rs 1,750 crore worth of shares while mutual funds net bought Rs 186 crore worth of shares. Interestingly, while the exchange websites showed that FIIs had net sold around Rs 1,100 crore worth of shares on Thursday, SEBI data reveals that foreign funds were net buyers of around Rs 125.7 crore.

Dealers said the discrepancy could be due to exchanges taking into consideration only secondary market trades on that day and not purchases through other sources like primary markets, FCCB conversion and preferential allotment. With the liquidity taps in danger of running dry, should the SEBI proposals to curb P-Notes become law, local operators continued to experience withdrawal symptoms for the third successive session on Friday.

Reflecting the jitters among investors, the Sensex plunged to an intra-day low of 17,226.18 before climbing to 17,559.98 at close, down 438.41 points over the previous close. The Nifty bounced from a low of 5,101.75 to end the day at 5,215.30, down 135.70 points. Reliance Energy shares, which had been in the forefront of the recent rally, was the top loser among the Sensex stocks shedding 16%. In the past couple of sessions, the stock has fallen over 25%. Among other prominent losers, ACC, Bharti Airtel, Reliance Industries, BHEL, Hindalco and Maruti Udyog were down between 4% and 7%. The losses in the indices were cushioned to some extent by 1-2% gains in stocks like Infosys, ONGC and Tata Steel. Traded turnover on both exchanges combined was around Rs 1.13 trillion. But dealers said a significant amount of turnover in the cash market was mainly because of the block trades in large-cap stocks. Dealers said any recovery from current levels was likely to be gradual. This is because the hot money flows, which was propelling stock prices till now, could be hard to come by in the near term.


Long-only funds save market from sharp fall

MUMBAI: Market recovered smartly on Friday after indices fell to the lowest levels in the ongoing correction of past two days. Brokers are of the view that ‘long-only funds’ and domestic institutions must have entered to prevent a drastic loss. BSE's Sensex closed 438 points down at 17,559.98, but up from the day’s low of 17,226. NSE's Nifty ended 135 points lower at 5215.3, recovering from the low of 5,102. Market breadth on BSE showed 2,162 declines and 570 advances, while on NSE, 1,023 shares fell and 161 gained.

“It looks like most of the pain is out of the system and the market is offering good opportunities at these levels,” said Manish Sonthalia, vice-president equity strategist at Motilal Oswal. He said investors should remain focused in large cap stocks and at these levels markets look to be somewhere near bottom.


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