The Telegraph
Since 1st March, 1999
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Sensex in last-lap collapse act

Mumbai, Feb. 1: The sensex rose to a dizzy height of 9993.92 ' just six points short of the magical 10k peak ' and then swooned as a feeling of vertigo enveloped equity markets.

Investors dumped stocks in a frenzied bout of selling to scoop up profits that sent the 30-stock barometer of the market’s mood crashing to 9859.26, shaving a huge 134 points from the heady intra-day peak.

Marketmen expect the index to make another valiant effort tomorrow to scale the peak but don’t expect it to stay at that rarefied level as a round of selling and correction will almost certainly kick in.

Brokers said the fall was precipitated by the anxiety that gripped investors as the index neared the magical figure of 10k.

“There was a feeling that equities were over-valued at the present juncture and this sparked the profit booking, which was led primarily by operators. The market breadth is certainly negative and the indices may open weak tomorrow,” said an analyst with a foreign mutual fund.

For those investors who were eagerly looking forward to the market barometer surpassing the magical summit, the day’s trading was, therefore, a case of being so near and yet so far.

There was a whiff of confidence earlier during the day as the BSE sensex opened on a strong note at 9959.24 against the previous close of 9919.89. However, nervousness soon set in as it touched the intra-day peak of 9993.92.

Worried over expensive valuations, investors hit the selling button, resulting in the index plummeting to an intra-day low of 9819.32, a fall of 174 points from the day’s peak. Thereafter, it ended at 9859.26, a loss of 60 points over Tuesday’s close.

On the NSE too, stocks slid from their peaks. Here, the Nifty shot up to a new high of 3011.05 points and ended lower by 29.55 points at 2971.55.

Barring the BSE capital goods index, all the other indices finished in the negative territory.

The BSE bankex was the worst hit as it plummeted 145 points. Brokers said a key factor that contributed to the bearish sentiment in banking scrips was the trend of rising interest rates.

The BSE bankex was followed by the BSE small cap and the BSE consumer durables indices. Despite the disappointment, there are a few who have not lost heart.

“It seems that we will have to wait for a while for the index to touch 10,000. There is nothing to be disappointed by today’s fall. There are still a lot of positives in the market. For example, liquidity is strong and the quarterly results from corporate India have also been robust,” an analyst from a foreign brokerage remarked.

The strong liquidity still present in the markets could be seen from the fact that foreign institutional investors that were the backbone of the rally witnessed during the last calendar year, made net purchases of $47.6 million on Tuesday.

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