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Dark Diwali looms: Sensex nosedives to sub-4600 level

The Bombay Stock Exchange Sensitive Index nosedived by 162 points as share prices tumbled across-the-board on huge offloading by operators as well as sustained selling pressure from foreign institutional investors today.

The domestic institutional investors reportedly stayed away from the market, dealers said.

Reflecting the major fall, the 30-share BSE Sensex opened at 4742.92 points, lower by about 14 points from the previous close and fell sharply by almost 180 points to touch the day's low of 4576.65 points before closing a little higher at 4594.57 points, showing a net loss of 161.63 points as against the previous day's close of 4756.20 points.

The S&P CNX Nifty index at the National Stock Exchange also declined sharply by 43.70 points to 1367.70 points from the previous close of 1411.40 points.

Barring a few second-line stocks like Mastek and Ingersoll Bharat Electronics, there was across-the-board decline, dealers said and added that Zee Telefilms, Ranbaxy, Hindustan Lever, Pentafour Software posted heavy losses while the State Bank of India, Reliance, MTNL and others too weakened sharply on speculative selling spree.

Commenting on the bearish phase, leading stockbroker and BSE vice-president Dina Mehta said that the market has gone down considerably only because of offloading of positions by players in view of fast approaching Diwali festival. The continuous selling spree by FIIs and lack of buying support from domestic institutional investors also added to the bearish trend, she added.

The Sensex has lost nearly 212 points in the last three trading sessions. It had gone down below the 4,600 level after a gap of about four months. Earlier the Sensex was quoted at 4,598 level on July 28, 1999, since then the benchmark of the BSE always moved in upward direction, sources at the BSE said.

Among other indices, the BSE-200 and Dollex indices closed lower by 19.47 and 7.42 points to 504.45 and 193.56 points as against the previous close of 523.92 and 200.98 points respectively.

The BSE-500 index also moved down by 59.59 points points to 1509.65 points as against the previous close of 1569.24 points.

Analysts at the market also attributed the fall to discouraging financial results by the SBI, MTNL and a few others.

Total turnover on the BSE reported during the day was Rs 21.78 billion.

Ranbaxy topped the list of turnover by registering the highest turnover of Rs 2.45 billion, followed by Satyam Computers Rs 2.31 billion, Zee Telefilms Rs 2.01 billion, Reliance Rs 1.11 billion, Himachal Futuristic Communication Rs 995.7 million, Silverline Rs 949.6 million, Pentafour Software Rs 836.3 million, Global Telesystems Rs 746.8 million, SBI Rs 693.9 million, L&T Rs 598.5 million, Tisco Rs 500.9 million, MTNL Rs 445.2 million, Infosys Technologies Rs 445.2 million, ACC Rs 435.4 million and Digital Equipment Rs 429.2 million.

"My outlook for the markets for the next fortnight is that the Sensex may fall by another 200 points. From there on it will be range-bound," an analyst said.

Asked why the markets take a downturn during the Diwali festival season, he said: "There are many reasons. It has got more to do with socio-economic factors than day-to-day developments. Diwali is a post-harvest festival when people generally spend rather than invest. There is a higher offtake of consumer goods like TV, domestic electronic appliances, clothing, etc. At the same time, industry witnesses cash squeeze because not all sales are on cash basis; this results in higher credit offtake and demand for funds. This results in a liquidity problem. This is the reason why the October-March period is called the busy season.

"These two factors mainly contribute to the fall in the markets. Post-Diwali comes the year-ending time for foreign institutional investors. During this time, the FIIs are hard put to showcase their performance, declare dividends, etc. The fund managers' bonus also depends on the performance. Then there is the long Christmas leave. Hence the markets generally drop after Diwali. This year, there are also these Y2K fears. Looks like a dark Diwali looms over the stock markets. And to think the BSE celebrated the scaling of Point 5000 by the Sensex just a few days back!"

UNI

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