Sensex tanks 490 pts on weak global cues
Mumbai, Jan. 27: The past few days have seen a mix of domestic and international factors pull the equity markets down. The BSE Sensex has lost close to 1,350 points in the past six trading sessions.
The rout started after the US President announced possible curbs on the activities of the big banks. Approaching expiry of the derivative segment and an expected rate hike by the Reserve Bank have also played their role.The Sensex closed down 2.92 per cent or 490.64 at 16,289.82 while the Nifty closed 3.4 per cent or 170.75 points at 4837.15, The Sensex opened with a gap of over 70 points on weak cues from Asia where banks faced huge pressure due to China’s tightening monetary policies.
“Foreign investors have been pulling money out for the past several sessions,” says Mr Jigar Lodaya of Sharekhan.
“The outflow started after the US President hinted at action on banks. Plus, there is also the fear that the Reserve Bank may act on rates. While this expectation has been there for some time, as the event nears, markets start getting jittery,” he adds.
Apart from these factors, the approaching expiry of the derivative segment is also playing a part. The rollover on Monday ahead of Thursday’s settlement day in the F&O segment was just 36 per cent compared to 49 per cent in December, and the downward pressure from the Dow and Asian markets saw the Sensex touch an intra-day low of 16,230.85.
There is strong support at 16,200 but if this level is breached the Sensex could find the next support level at 15,400 said Mr Pradip Hotchandani, technical analyst at Anagram Securities Ltd.
Looking at the advantages of this downward pressure on the indices Mr Dinesh Thakkar chairman and managing director, Angel Broking said he believes the current correction provides an opportunity to investors to gain exposure to equities.
Not everyone agrees though.
The correction is expected to continue as the corporate results have not been upto the mark and the market will correct till it finds its equilibrium between fundamentals and with valuations said Mr Jagannadham Thunuguntla, head, equity SMC Capital.
Age Correspondent
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