Mumbai, Oct. 8: The stock markets today broke into a sweat over fears of early polls, setting off wild oscillations in the sensex.
After coming tantalisingly close to the 18000-mark, the Bombay Stock Exchange bellwether lost its way and plummeted over 660 points during the day. The sensex, however, closed the day with a fall of 282 points over its previous close.
The political tensions surfaced just before the start of the second quarter earnings season, with IT heavyweight Infosys set to announce its results on Thursday.
Some analysts said today’s fall, after a period of rapturous ascent, could signal the start of a correction phase.
They feel the sensex can slip by another 600 points in the next few sessions.
Concerns are now mounting over a less-than-robust second-quarter show on account of the rising rupee and a jump in input and wage costs.
Stocks today failed to take cues from upbeat sentiments in global markets. The sensex opened higher at 17901.94 and came very close to the 18000-mark as it touched an intra-day peak of 17982.59. This peak is also an all-time high for the sensex.
However, the momentum could not be sustained because of sharp selling pressure.
It was now a story of a precipitous decline that touched rock bottom towards noon when the sensex hit 17322.14, a crash of 660.45 points from the day’s peak.
The sensex managed to recoup some of the losses later in the day and ended at 17491.39, a net fall of 281.97 points, or 1.59 per cent, from Friday's close of 17773.36.
“Politics will remain a major worry for the markets from here on. If the second quarterly results are also not in line with expectations, we can see the stock markets taking a major hit,” an analyst with a foreign brokerage said.
Heavyweights such as Reliance Industries and the Oil and Natural Gas Corporation saw sharp falls, while nearly all the sectoral indices of the BSE ended in the red.
There were also heavy corrections in stocks, such as Reliance Energy, that posted big gains in the past few sessions. Bombay Stock Exchange’s PSU, metal and realty indices got mauled, while banking scrips suffered over fears of the Reserve Bank of India (RBI) raising the cash reserve ratio later this month to suck out excess liquidity.
The State Bank of India lost Rs 80.60 to Rs 1,782.65 and ICICI Bank fell by Rs 20.45 to Rs 1,016.35.
The IT index, however, bucked the trend. Market observers said this was because the performance of tech companies would not be as bad as was expected initially. Infosys Technologies rose by Rs 10.80 to Rs 2,000.45, Satyam Computers by Rs 11.10 to Rs 455.55, TCS by Rs 8.30 to Rs 1,078.50 and Wipro by Rs 8.50 to Rs 469.65.
The rupee today ended at 39.46 against the dollar, stronger by three paise from Friday’s close of 39.49. The Indian currency was largely buoyed by strong capital inflows into stocks.
In active trade at the interbank foreign exchange market, the rupee fluctuated in a range of 39.37 and 39.49 after resuming firm at 39.43 a dollar.
Crediting the rupee’s early rally, to a high of 39.38, to strong Asian markets, forex dealers said the rupee moved in tandem with the local equity market.
The rupee has been strong, supported by unprecedented portfolio inflows since September 19. Foreign institutional investors poured in more than $5 billion in the last 11 days.
There was some dollar selling from exporters, but state-owned banks absorbed the sales at the behest of the RBI, a forex dealer said.