Mumbai, May 24: It’s turning into a dance macabre ' and the zig-zag course of the sensex has left investors bemused with no real sense of which way the market is going.
After staging a sharp pullback yesterday, the bellwether index plunged 249.63 points or 2.3 per cent to end the day at 10573.15. The market is expected to remain volatile tomorrow with all eyes focused on the settlement in the futures and options (F&) segment.
Marketmen say that after the recent meltdown, traders and investors have continued to unwind the huge positions which was built up in the derivatives segment.
“It has been witnessed that the sessions prior to F& expiry is marked by volatility as there would be a tussle between players trying to pull the market up to gather more profit or limit losses, while there would be another set who would sell at the highs,” said a derivatives analyst.
“However, in view of the recent meltdown, there might be several players in the derivatives segment who would be eager to square off their open positions in order to limit further losses,” he added.
According to provisional data, Nifty June 2006 futures settled at 3002, a steep discount of 113.55 points over the spot Nifty closing of 3115.55. Nifty May 2006 futures were at 3057, a discount of 58.55 points over the spot closing of 3115.55.
The sensex swung 496.37 points for the day between a low of 10504.59 and a high of 11000.96. Although the market opened on a firm note and gained over 75 points in early trade, selling pressure pulled the sensex down shortly and it fell by as much as 200 points.
It slowly staged a recovery after that and hit a high of 11000.96 during the trading session. However, the market turned weak in the late session and touched a low of 10504.59 amid weakness in metal and auto stocks and a sharp fall in select blue chips. Nifty lost 83.80 points or 2.6 per cent to settle at 3115.55.
The market breadth which was strong till the first half of the trading session, weakened later. Around 1366 stocks declined on BSE compared with 1101 stocks that rose. Forty stocks were unchanged. BSE clocked a turnover of Rs 3,739 crore compared with Rs 3,820 crore on Tuesday.
The FIIs continue to be sellers for the seventh straight day. They have sold shares worth a net Rs 1,243.20 crore on Tuesday. Their net outflow till May 23 aggregates to Rs 3,443.50 crore.
While the Indian markets responded to the rebound in the Asian markets intra-day, it could not hold on to the gains as registered by those markets. Key benchmark indices in Japan, South Korea, Taiwan, Singapore, and Malaysia were up by between 0.13 per cent and 1.97 per cent, with Japan's Nikkei being the top gainer. From a lifetime closing high of 12612.38 on May 10, the sensex has pulled down 2039.23 points or 16.1 per cent in a short while to 10573.15.
Meanwhile, NSE has revised the exposure/extreme loss margins in spot and derivatives from 10 per cent or 1.5 times the standard deviation, whichever is higher, to 5 per cent or 1.5 times the standard deviation, whichever is higher. In index products in derivatives, the limit has been revised from 6 per cent to 3 per cent. This shall come into effect from tomorrow.
Apart from the Shanghai Composite Index, all the emerging markets including Indonesia, Brazil, Mexico, Hong Kong, Korea and Russia have witnessed major correction in the last few trading sessions.