The Telegraph
Since 1st March, 1999
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Selling storm blows away stock gains

Mumbai, Jan. 21: A selling avalanche today buried markets under losses they have not seen since the 2001 March mayhem amid mounting fears of diminished FII presence.

Dalal Street was in a tailspin with the BSE sensex plunging 164 points, or 2.77 per cent, to 5,758.19 points at the end of session rocked by rumours of heavy selling by foreign funds and panic-offloading in derivatives. There was a sense of relief when Sebi figures showed FIIs invested more than Rs 300 crore today.

Dealers and operators agreed the losses in share values was part of a long-awaited correction but had hardly ever bargained that it would so intense and so swift. Many players were taken by surprise on the severity of the selloff. It was one of the sharpest falls since Yashwant Sinha’s budget sent markets tanking in 2001.

“This is the most virulent plunge in recent times,” said Ashok Kumar, CEO, Lotus Consultants, a premier investment advisory firm. “It’s a wake-up call for everyone,” he added.

He advised retail investors to stay out during the phase “when acute swings both ways will be the order of the day”.

Rumours of margin money requirements forcing a selloff and of two hedge funds selling heavily did the rounds. But they could not be verified.

The sensex has shed 5 per cent in two days and 7.7 per cent from its peak of 6,249.60 points in early January.

“Market corrections during bullish times are always severe,” said Arun Kejriwal of Kejriwal Research and Investment Services. Another dealer said, “Volatile corrections are a part and parcel of bull markets.”

“Free falls also provide bargains and opportunities for value investors,” said Dhiraj Sachdev of ASK Raymond James.

Losers beat gainers 10:1 on a volume of 18.5 crore shares. It was the heavyweights, the ones that propelled the sensex 73 per cent in 2003, that lost heavily today.

PSU index stocks were the major losers, said dealers. They were followed by Reliance Industries, which dipped Rs 21 to Rs 551.40 and State Bank, which lost Rs 28.15 at Rs 594.45.

The other major losers today were Tata Motor which shed Rs 27.65 to Rs 458.45, Tata Steel by Rs 20.80 to Rs 417.35, Zee Tele by Rs 6.55 to Rs 151.50, ACC by Rs 7.50 to Rs 240.75, BSES by Rs 24.70 to Rs 499.80 and Infosys Tech by Rs 21.25 to Rs 5,370.40.

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