Sensex swings 588 points

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MUMBAI: Strong possibility of U.S. Fed rate hike continued to cause alarm worldwide, taking a heavy toll on the country's stock markets, which plunged by another 133 points on Wednesday to end at 8929.44 as investors resorted to frenzied selling.

The market situation worsened further with a slowdown in inflows by foreign institutional investors and mutual funds facing a cash crunch due to heavy redemption pressure.

Initially, the Bombay Stock Exchange 30-share sensitive index zoomed by 324.41 points to the intra-day high of 9387.06, in line with a firm trend in Asian markets, despite lack of investors' support.

But the markets later turned extremely erratic and the Sensex fell sharply after the midsession on heavy sell-off touching a low of 8799.01, a big swing of 588 points before ending the day at 8929.44. The Sensex has fallen by 881 points or 8.98 per cent during the three-day slide.

The National Stock Exchange's S&P CNX Nifty too fell by 30.50 points or 1.15 per cent to 2632.80 from last close of 2663.30.

Domestic mutual funds, which maintained relatively low profile during early trading, later pressed the sale button in a bid to raise funds to meet increasing redemption pressure, mainly from corporates, market players said.

Mutual funds have been consistent sellers in the month and have made heavy withdrawals of Rs. 1,421 crore so far.

Meanwhile, considering the overall situation, presently the focus of attention seemed to be on global developments with the U.S. Federal Reserve appeared ready to hike interest rates to counter rising inflation.

The market has failed to show any resilience even at the lower levels with a sustained selling pressure gathering a momentum day by day, they added.

The volume of business was low at Rs 2,708.27 crore.



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