The Hindu : Front Page : Sensex plunges 435 points

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Friday, Aug 22, 2008
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Sensex plunges 435 points

Inflation sensitive sectors such as realty and banking witness heavy selling

MUMBAI: After posting a modest gain, the markets nosedived on Thursday with the Bombay Stock Exchange sensitive index (Sensex) dipping by over 430 points on heavy selling in interest-sensitive banking and realty stocks.

Marketmen said selling trend returned ahead of the release of inflation data as investors anticipated the rate of price rise to go up further. The market on Wednesday snapped five days of selling pressure to post a gain of over 100 points.

The Sensex settled at 14243.73, a loss of 434.50 points against Wednesday’s close of 14678.23. The National Stock Exchange index Nifty also lost 131.90 points, or 2.99 per cent, to close at 4283.85.

Cautious stance

Market participants said investors adopted a cautious stance amid a possibility of further rise in inflation following approval to an average 21 per cent salary hike to government employees.

A weakness in Asian and European equity markets also impacted sentiment in the domestic bourses, they said.

Asian indices fall

Asian indices fell by about 0.77 - 3.63 per cent while European markets were trading substantially lower in the morning session. Marketmen said investors looked worried about the financial crisis across the world that could drag G-7 nations into a recession and have a cascading impact on global markets.

Inflation sensitive sectors such as realty and banking were the worst affected. Realty shares such as HDIL tumbled by 25 per cent, India Bulls by 7.36 per cent, DLF by 5.55 per cent, Unitech by 5.35 per cent, Sobha Developers by 5.20 per cent and Penland by 5.24 per cent.

It is feared that a slowdown in economy will result in lower demand for real estate, leaving the developers high and dry. — PTI

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