May 11: The euphoria over the $1 trillion bailout package for Greece and other struggling economies fizzled out on Tuesday on profit booking and fears that Greece would not be able to cut her fiscal deficit to the extent demanded by the bail-out package. The Sensex closed down 189.02 points at 17,141.53 while the Nifty was down 57.45 points at 5136.15.
The Sensex spiked in late afternoon trade after the European markets opened down more than one per cent as investors were wary about the impact that the $one trillion package would have on Greece. Besides Moody’s said it may downgrade the sovereign rating of Greece and Portugal to junk grade.
The China effect added to the Grecian woes as China’s inflation figures for April were at an 18-month high.
Commodity stock were a drag on the global exchanges as they skid on the back of a strong dollar. The metals stocks took a big hit on the Bombay Stock Exchange. Hindalco was amongst the worst hit, down four per cent despite coming out with good quarter results on Tuesday.
“High inflation in China and weakness in Chinese stocks added to the weakness of Indian stocks. Fresh build up of short positions was noticed as punters felt that the markets would go down further,” said Mr Avinash Gupta, of Bonanza Portfolio Ltd.
There was some buying interest in the second part of the day, says Mr Alex Mathews of Geojit BNP Paribas, but it wasn’t good enough to take the indexes above the green line. The US index futures were also trading in the red with the Dow futures down.