Sensex falls 228 points to below 18k level on global jitters

The BSE benchmark Sensex plunged 228 points on Friday to close below the psychological 18,000-level for the first time in about one month on fag-end brisk selling by nervous fund houses ahead of key economic data from the US.

Led by heavy profit-booking in realty, banking and IT stocks, the Bombay Stock Exchange's 30-share bellwether closed the day lower by 227.94 points, or 1.2 per cent, at 17,998.41, its worst closing since July 30. The Sensex had closed July at 17,868.29 level.

The wide-based 50-share Nifty Index of the National Stock Exchange, too, lost 1.26 per cent to finish at 5,408.70. On a weekly basis, the Sensex recorded a fall of 2.2 per cent this week. Analysts said nervous investors preferred to book profits ahead of crucial GDP data for the world's biggest economy, the US, and a statement from Federal Reserve chief Ben Bernanke.

The market sentiment was already dampened after weak economic data on jobs and housing and any negative news this time may trigger a further sell-off by fund houses, said an analyst.

A smart climb in ONGC and Tata Steel was washed off with all-round profit booking, especially in realty, banking and IT stocks. Except oil and gas, all the 13 sectoral indices of the BSE ended in the red, with losses ranging from 1 to 2.6 per cent.

"There is nervousness among investors on concerns of the pace of global economic recovery. Indian markets have already rose at a level from where a correction cannot be averted," Anand Rathi Securities head of Research D.D. Sharma said.

ICICI Bank plunged 2.84 per cent, SBI 2.16 per cent, HDFC Bank 1.7 per cent and HDFC 0.8 per cent. Realty major DLF sank 3.30 per cent, the most in the Sensex pack.
IT bellwether Infosys, which has the highest weightage in the Sensex after RIL, tanked nearly 2 per cent. TCS lost 2.10 per cent and Wipro 0.88 per cent.

Analysts said, investors were concerned about the pace of the recovery in the world's largest economy US and some changes in the DTC, which has hiked the minimum alternative tax to 20 per cent.

"Though there have been some relaxation in corporate tax, but rise in MAT is a matter of concern for investors," Sharma added. On Thursday, the Cabinet approved the Direct Tax Code (DTC) Bill, including tax rates, which will now be presented to the Standing Committee of Parliament with possible implementation from April, 2011.

There in no change on capital gains tax, while corporate tax rates have been reduced to 30 per cent without any additional surcharge or cess. MAT has been set at 20 per cent of book profits. Personal tax rate slabs have also been increased.

Index heavyweight Reliance Industries dropped for another day and slipped below the Rs 950 level. The scrip ended the day at Rs 949.75, down 0.73 per cent.

In its report on emerging markets, Barclays Capital said it continues to "anticipate a broad range-trading environment and expect EM asset markets to respond to the volatile global markets calmly, if not defensively."

In the last session, foreign institutional investors sold shares worth Rs 290.40 crore, as per the data available with market regulator Securities and Exchange Board of India.

Defying the broader market, state-run energy giant ONGC ended with a gain of 2.87 per cent, after the company said it has discovered oil in Gujarat. "Oil discovery is the current trigger for ONGC and helped the stock to outperform the broader market," Sharma said.

Tata Steel rose 1.67 per cent, Reliance Communications 0.41 per cent and ACC 0.29 per cent. In the Sensex pack, 26 stocks ended with losses, while four managed to settle in the green.

Other major index losers include Hero Honda (down 3 per cent), Tata Power (down 2.55 per cent) and L&T (down 1.60 per cent). "The Nifty closed near its 50-day moving average (DMA) support levels (5,392 levels).

Although, the Nifty has already violated support line of the rising wedge prevailing at 5,440 levels, this could dampen sentiment further as lower projections of rising wedge come in the range of 5,200 to 5,230," brokerage house IIFL's Amar Ambani said.

On the global front, Chinese and Japanese markets closed in the green, while Europe was trading lower at mid-session. The Dow Jones Industrial Average closed below 10,000 on Thursday, a day ahead of an expected downward revision in US second-quarter economic growth.

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