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Investors rush to dump stocks

Mumbai, Feb. 1: The bear grip on the bourses tightened on Tuesday to pull the sensex down for the fifth straight session.

The sensex fell 305 points, or 1.67 per cent, to close at a five-month low of 18022, while the broader 50-share Nifty was down 88.7 points, or 1.7 per cent, to end the day at 5417.2 on Tuesday.

Foreign institutional investors continued to sell, marking a technical shift out of India to other export-oriented regions, said market participants. Several other factors, both global and domestic, prompted Tuesday’s fall. Rising crude prices and the inflation bogey worried investors on the domestic front.

Fears that emerging markets could become even more unattractive with the continued unrest in Egypt had an impact on the Indian bourses.

“There is no conviction to buy, with foreigners shunning the Indian markets. Retail investors are holding on to their investments. I see the probability of a downside of 5 to 7 per cent on purchases made at these levels,” said Manish Shah, Motilal Oswal’s associate director-equity advisory.

Other brokerages painted an equally gloomy forecast. Sharekhan’s head of research Gaurav Dua said, “The negative bias is very strong. Going forward, we hope the market will find some support and form its own range.”

The sensex has lost roughly 6 per cent ever since the RBI raised interest rates on January 25 to tame inflation.

Reliance Industries, the sensex heavyweight, fell 2.6 per cent to close at Rs 895.65 on reports that the Comptroller and Auditor General (CAG) may question the government’s move to allow RIL to increase its capital expenditure in the KG-D6 basin as it will bring down the Centre’s share of revenues.

In the auto pack, Tata Motors led the decline as it reported lower sales of Indica in January compared with the corresponding period last year. The Tata Motors stock fell nearly 7 per cent to close the day at Rs 1,068. The realty index showed the biggest decline, falling 4 per cent.

DLF fell 1.38 per cent to close at Rs 220.80 after it announced that consolidated net profit for the third quarter fell 0.47 per cent. There were 1,916 declines compared with 922 advances on the Bombay Stock Exchange.

FMCG fear

Leading Indian FMCG firms Dabur and Marico Industries have shut down their plants in Egypt because of the political crisis in the African nation, while Emami is assessing the situation.

Dabur India chief executive officer Sunil Duggal said the company had temporarily shut its hair oil production plant in Egypt.

“If the unrest continues for a longer period of time, there might be some impact,” Duggal said.

Marico has shut down its two factories in the African nation. “Egypt is an important market for Marico. Our factories have been temporarily closed as a safety measure,” a Marico spokesperson said.

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