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Sensex falls to 3-month low on US job data
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Dips below 16K; Reliance hits 52-week low.
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Our Bureau
Mumbai, Feb. 5
The poor US job data published on Thursday had its ripple effect thousands of miles away here in India where it sent
stocks plummeting to a three-month low on Friday.
The benchmark Sensex sank below the 16,000-mark for the first time since November
2009, crushing the optimism that had set in during early January
this year when it was at its 12-month high of 17,790. From then to its Friday
close, the index has fallen more than 11 per cent.
On Friday, it dipped 434 points or 2.63 per cent to close at 15,790.93. The Sensex
opened at 16,222 and fell almost continuously right to the end of trade. The Nifty fell 2.61
per cent to 4,718.65. Reliance Industries, the heaviest Sensex stock by weightage, touched its 52-
week low of Rs 975 a share.
All the major global equity markets were trading in the red on Friday. "The US job data
led to a powerful pull-back in the markets there last night," said Mr Saurabh Mukherjea,
Equity Head of Noble group (India), the India arm of the British investment bank.
The Dow was down 2.61 per cent and the Nasdaq 2.99 per cent on Thursday.
It was the FIIs again that
brought the markets down
here, their net sales on Friday
at Rs 1,726.7 crore, taking their
February net sales up to Rs
2,435.7 crore.
"With added worries coming
in from Europe, FIIs are
getting out of risky (overvalued)
markets such as India,"
explained Mr Jagannadham
Thunuguntla, Head of Equity
at SMC Capitals.
Most of the selling on Friday
took place in the metal, realty
and auto stocks. Metal stocks
were sold because of the dollar
rise and the fall in gold. Even
sugar stocks were shed on reports
of increased production
in Maharashtra.
UNWINDING $ CARRY TRADE
There is quite a bit of unwinding
of dollar carry trades (borrowing
in dollar at low interest
rates and investing in elsewhere
in high yield markets),
said Mr Thunuguntla. "This is
leading to more selling by FIIs,"
he added.
As some investors sold, more
and more joined the herd. "Investors
need some sort of a cue
to book profits as a lot of them
are sitting on a lot of gains due
to the rally seen last year," said
Mr Ashu Madan, President-
Equity Broking at Religare
Securities.
Domestic institutions were
net buyers for Rs 1,168.98 crore
on Friday. Retail investors
were net sellers for Rs 9.73
crore on the BSE. Mr Thunuguntla
said that retail investors
have remained very wary of the
markets as they burnt their fingers
very badly in the crash of
2008.
Mr Ravi B, a retail investor
from Bangalore, reflects this
wariness. He said it was becoming
increasingly difficult
for him to predict which way
the markets will go. "To be on
the safer side I did sell a few of
my shares to book profits before
it is too late," he added.
All the major sectoral indices
on the BSE ended the day in the
red, with the realty, metal and
PSU indices leading the fall. On
the BSE, 81.6 per cent of the
scrips (2368) fell, whereas only
487 advanced.
Tata Power was the sole
gainer among the Sensex
scrips; it was up marginally by
0.8 per cent. Hindalco, Tata
Steel, ONGC, Jai Prakash Associates
and Mahindra and Mahindra
were among the biggest
losers of the day among the
benchmark stocks.
It was not just the equity
markets which fell on Friday,
the commodities markets too
took a beating. One of the reasons
being again, the US job data
as America is one of the
biggest consumers of commodities,
said the head of a broking
firm.
According to data on Bloomberg,
crude oil was down 0.6
per cent at $72.7 a barrel and
gold was down 1.01 per cent at
$1052.3 per ounce. "Investors
are not just booking profits in
the equity markets but across
asset classes," said Mr Madan.
Related Stories:
Bulk deals no big indicator of market movement
Retail investor interest waning in top companies
Market melts on global cues, monetary policy fears
Sensex tanks on lacklustre Q3 corporate show
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