The Telegraph
Since 1st March, 1999
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Markets forget to feel good

Mumbai, Jan. 30: Bears came out of the woodwork and gave the markets another drubbing today, spooking investors with a gut-wrenching spell of volatility that has defied pre-poll dollops and the FII share scramble. The sensex shed 107 points on Dalal Street, which was overrun by skittish sellers ready to scamper out of their stocks in the fear of limiting bigger losses in future.

So fierce was the bear onslaught that it killed the euphoria from the steady stream of rosy corporate scorecards. Dealers, who had been counting on a surge today after the settlement of January deals in the futures section, were left scratching their heads on the plunge. Indications of more sops through vote-on-account, scheduled to be held on February 3, were shrugged off.

The movement of the 30-share index showed the sellers’ siege. It hit an intra-day high at 5854.29 early on, but sunk to 5685.64 before closing at 5695.67 against 5802.75 on Thursday. The BSE-100 index, too, dropped by 70.99 points to 2946.14 from its previous finish of 3017.13.

“Some investors have made profits and these are people who prefer to keep their money in the bank, not cling on to notional profits in a market as volatile as this,” said Ashok Kumar, CEO of Lotus Strategic Consultants.

He agreed with those who believed the markets must go through a correction after months of non-stop gains, but warned that the current slide could well deepen from now. “There’s still more bloodletting to come.” What has frayed nerves further is the threat of bird flu epidemic now raging in a large swathe of southeast Asia. “If it spreads to India, it may be disastrous,” analysts say.

The political uncertainty has not helped matters. Investors are unnerved by the prospect of a hung Parliament, which could befuddle businessmen and foreign investors, besides stalling reforms and PSU sale. Though opinion polls don’t say so, it is a scary scenario.

The silver lining in the dark cloud has been the attitude of foreign funds, which have stayed their course in the slide. Their net purchases accounted for nearly Rs 614 crore in the first two sessions of this week.

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