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Fund jitters leave stocks tottering

Mumbai, July 21: Shares swooned over concerns that the torrent of foreign fund inflows could turn into a trickle, sending indices on a tumble that left the Bombay Stock Exchange (BSE) sensex tottering below 3,600.

Today’s 78-point plunge took losses in the past three sessions to a whopping 4 per cent, deepening a decline that began last week with the halt to a seven-week rally which added Rs 1 lakh crore to shareholder wealth.

A slowdown in foreign institutional investor (FII) buying coincided with heavy selling by operators and domestic institutions. Foreign investors are reported to have made net purchases of only Rs 107 crore in the four sessions between July 14 and July 17, after pumping in money with a vengeance in the first half of 2003.

Investors were seen winding up positions built up over the past couple of months in an effort to book profits even as domestic institutions dumped market-movers like Hind Lever, Reliance, Tisco and State Bank.

So severe was the selloff that even Telco, which beat market expectations with heady first-quarter numbers, could not come out unscathed from the pounding. The scrip lost 5 per cent at Rs 215 — after it declared a 258 per cent growth in net profit for April-June.

FMCG major Lever shed 3.7 per cent at Rs 146.75 amid concerns of languid sales. According to market watchers, while various research houses have downgraded the stock citing stiff valuations, the outlook on technology stocks has been clouded by Wipro’s worse-than-expected results for the first quarter.

The sensex opened at 3655.26 and plumed its intra-day low at 3564.41 before ending at 3569.58 against Friday’s close of 3647.58, a net loss of 78 points or 2.14 per cent.

Market analysts said the stormy start to the monsoon session of the Parliament also contributed to the bearish undertone. The lack of buying support fuelled losses. “The markets were in an over-bought position. Jitters over a possible slowdown in foreign fund inflows contributed to the decline,” a broker pointed out.

Some blamed the convulsions on filibuster. “Look at history, when Parliament sessions are on, markets have never boomed. The elusive correction finally happened. Profit booking was the order of the day,” Arun Kejriwal of Kejriwal Research and Investment Services said.

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