Stock indices fell by more than one per cent on Wednesday following selling by foreign institutional investors (FIIs) and profit booking by other market participants. The Bombay Stock Exchange (BSE) 30-share sensitive index (Sensex) dipped by 255.69 points to close at 20635.13. The broader 50-share Nifty of the National Stock Exchange fell by 80.45 points to close at 6122.90.

“Markets saw a good amount of correction today. This was predominantly driven by profit taking at higher levels,” said Sudip Bandyopadhyay, Managing Director and Chief Executive Officer of Destimoney Securities. According to him, “there is no reason for panic as the global liquidity continues to be robust and FIIs will continue to invest in Indian markets.”

Markets opened negatively but by noon it recovered to test a level of 6204 compared to the previous day’s close of 6203 “but was not able to sustain,” said Alex Mathews, Research Head, Geojit BNP Paribas. Heavy selling was seen in banking stocks, which spread to other sectors in the later part of the day. “Investors do not want to carry long positions ahead of U.S. retail and housing data which was expected on Wednesday. European indicators were also down, ” said Mr. Mathews, adding, “marginal rupee depreciation was affecting investors’ sentiments”.

“Major technical indicators are still not giving any buy signal. So the market may consolidate at around 6000 levels,” Mr. Mathews added.

Rupee weakens

The rupee closed at 62.57 per dollar on Wednesday compared to its previous close of 62.36 on Tuesday. It also touched a low of 62.68 per dollar in the intra-day.

However, Mr. Bandyopadhyay said “the rupee saw some correction driven by oil importers demand. This should not be any cause for worry as FII investment will continue to flowing in coupled with healthy FCNR deposit accretion.”

More In: Markets | Business