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Late plunge after early surge

Mumbai, Sept. 11: After keeping its head above water for over two months, the sensex plunged 367.96 points — its biggest fall since July 17 — as punters pounded stocks in reaction to a weakness in global markets that were haunted by the grim memories of 9/11 on its fifth anniversary.

“Weak Asian and Eurpoean markets coupled with weakness in metals on the London Metal Exchange affected the markets back home,” said Manish Sonthalia, vice-president (equity strategy), Motilal Oswal Securities. Dealers said the foreign institutional investors also dumped derivatives worth Rs 1,646 crore over the past two days, which undermined sentiments.

The stock wobbles were accentuated by the slippery prices of oil, gold and basic metals on world markets.

Crude oil for October delivery fell as much as 70 cents, or 1.1 per cent, to $65.55 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the lowest intra-day price since April 4.

Gold tumbled below $600 an ounce — a welcome development ahead of the marriage season in India. Gold for immediate delivery fell as much as $18.30, or 3 per cent, to $592.49 an ounce, the lowest since June 29. Gold for delivery in December plunged by $14.20 to $603.10 an ounce.

In Mumbai, the price of gold fell by Rs 220 per ten gram and closed at nearly a three-month low of Rs 8,985. The precious metal had closed at the same level on June 30, after which it continued to trade above the Rs 9,000-mark.

According to forex dealers, withdrawal of foreign funds from the stock market also impacted the rupee, which ended sharply lower against the US dollar. After opening low at 46.26 per dollar from Friday’s close of 46.23 a dollar, it moved in a range of 46.23 and 46.31, before ending at 46.31.

Day of wobbles

After opening firm at 11959.56, the sensex reached a high of 11971.60 in early trade. However, the index dived in the last 90 minutes of trading by over 400 points to a low of 11505.60.

It ended the day at 11550.69 against Friday’s close of 11918.65, a net fall of 367.96 points or 3.09 per cent.

On July 17, it had toppled 385 points, or 3.61 per cent, to end the day at 10293.22.

The sensex had gained 1832.74 points, or 18.17 per cent, to close at 11918.65 on September 8 compared with the close of 10085.91 on July 21.

“The market was at a key resistance level after its sustained rise since late July and a bout of profit taking was expected at these levels. However, since the positions were not too significant in the market, today’s sharp fall did not create any panic,” said Sonthalia.

“The market is expected to move in a range of 12200 and 11200. While profit booking might emerge at higher levels, indices at lower level will evince buying interest,” said a market analyst.

“The third quarter results will provide the cues for market movement. While the valuations look reasonable now, a spate of expected earnings upgrade will make them cheap, from where buying should emerge,” said Sonthalia. The market is trading at 14.8 times the fiscal 2008 earnings.

Of the total 2,568 shares traded on the BSE, 1,971 recorded losses, while 551 gained. The trading volume was low at Rs 3406.61 crore compared with Rs 3,503.29 crore on Friday.

Asian markets

Stock prices in Japan were dragged down today by disappointing machinery orders figures and Hong Kong was hurt by losses in China-related companies as most Asian markets dropped. The Nikkei 225 index fell 286.08 points to 15,794.38 on the Tokyo Stock Exchange.

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