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Sudden dip in late trade

Mumbai, Jan. 2: The BSE Sensex today fell 252 points — its biggest drop in six weeks — after a late bout of profit booking wiped out the day’s gains.

The sudden dive in stocks in the last 90 minutes of trade took the market by surprise.

The Sensex had climbed almost 200 points to 21331.32 in early trade. The decline started in the afternoon as the index slid to the day’s low of 20846.67, a drop of 485 points from the day’s high. The Sensex closed below 21000 at 20888.33, a decline of 252.15 points, or 1.19 per cent.

This has been the biggest fall since November 21, when the Sensex lost 406.08 points. The Sensex is now back below the 21000-mark after two weeks.

The broader Nifty of the National Stock Exchange (NSE) took a hit of over 137 points from its intra-day peak to finish at 6221.15, a drop of 1.28 per cent, or 80.50 points.

A section of the market said the sudden crash was on account of basket selling (selling a bunch of shares simultaneously) of Nifty stocks by a foreign institutional investor.

Interestingly, provisional data available from the stock exchanges showed foreign investors were net buyers in equities. According to FII data from the NSE, foreign investors made net purchases worth Rs 674 crore today.

Another speculation doing the rounds was that the Union government may soon announce more populist measures to combat the growing popularity of the Aam Aadmi Party. The fear is that such measures will have an adverse impact on the country’s fiscal deficit.

An analyst with a domestic brokerage said a correction was on the cards following the recent rally in stock prices.

Apart from profit booking, he attributed the fall to the news that the Chinese economy might be slowing.

Further, India’s manufacturing sector decelerated marginally last month amid a slowdown in domestic order flows.

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