The Bombay stock Exchange (BSE) 30-share index, Sensex, dipped by 425.41 points to close below the 16000-mark on Monday due to a host of issues, including the European debt problems and the unresolved U.S. debt issue.
The Sensex closed at 15946.10 a fall of 2.60 per cent. Metal stocks led the fall with 3.46 per cent followed by banking shares at 3.24 per cent. The broad-based National Stock Exchange's 50-share Nifty fell by over 125 points to 4778. This was the eighth consecutive day of fall for the equities.
Markets began on a weak note on subdued global cues. However, selling gained momentum progressively throughout the day. Key European markets were also trading lower by around 2 per cent, which added to the overall selling pressure. There were also reports that the U.S. super committee has not been able to arrive at a consensus on the deficit cutting plan, which made markets nervous. Further, the fall in India's GDP (gross domestic product) growth is a major concern for investors in Indian equities. Bank of America Merrill Lynch has cut its India GDP growth estimate for 2012-13 by 30 basis points to 7.2 per cent.
The sell-off was broad-based and the market breadth was highly negative. Among sectoral indices, metals, bank, realty and power utilities lost heavily. Among individual heavyweights, Bharti Airtel (on reports of CBI raids on its offices) and Reliance Industries were down 2 per cent each, said Dipen Shah, Head-Fundamental Research, Kotak Securities. In the next couple of days, focus will shift to the U.S., wherein the ‘Super Committee' has to come up with a solution on deficit reduction by November 23 (Wednesday). “If an acceptable decision is not reached, it may have far-reaching consequences on the U.S. ratings.”
The Sensex has lost 1623.43 points or 9.24 per cent in eight straight sessions, destroying nearly Rs. 5.50 lakh crore worth of investor wealth in the process.
Domestically, below-expected corporate earnings posted for the second quarter, high interest rate regime to combat inflation and lack of major policy initiatives have affected sentiment.