Markets hit by weak sentiment

India's benchmark indices, the Sensex and the Nifty, fell as much as 2.2 per cent, along with other global markets, as the Greek crisis triggered a flight to safe-haven assets. With Greece set to default on its debt repayment, due on Tuesday, foreign investors pulled out about Rs 700 crore from Indian stocks. Investor sentiment was also hit by the Chinese market slipping into bear territory, falling about 20 per cent from its peak this month.

The 30-share Sensex ended at 27,645.15, down 166.69 points, or 0.60 per cent, after falling as much as 600 points in intra-day trade. The broad-based Nifty lost 0.75 per cent, or 62.7 points, to close at 8,318.4, after dropping 2.2 per cent during the day.

Experts said the market managed to recoup most losses, as domestic investors stepped up buying. Domestic institutional investors, including mutual funds and insurance companies, bought shares worth about Rs 900 crore on Monday, provisional data provided by stock exchanges showed.

Market players said the stock market would remain volatile through the week, as Greece, which is to repay ^1.6 billion to the International Monetary Fund on Tuesday and hold a referendum on a bailout plan proposed by its creditors on Sunday, remained the focus of attention.

"It was expected the Greece issue would be resolved but the announcement over the weekend came as a bit of a shock....foreign investors are taking risk off the table," said Andrew Holland, chief executive of Ambit Investment Advisors.

Experts said investors would adopt a cautious stance till more clarity emerged on the situation. "Given the risk-off trade, a near-term sell-off in markets, led by FII (foreign institutional investor) selling, is quite possible. However, India is much better placed to withstand global volatility, given the record high forex reserves compared to a year ago," said Sanjay Kumar, chief investment officer, PNB MetLife.

Technology stocks, led by Infosys, led the decline on Monday, after Tech Mahindra cautioned against a weak first quarter due to higher visa costs. Hindalco, which fell 3.5 per cent and State Bank of India (down 2.1 per cent) were the worst-performing stocks on the Sensex, as only six of its components managed to end with gains. The boarder market remained weak, with two declining stocks for every one that advanced. The BSE small-cap and mid-cap indices fell 1.5 per cent and 1.4 per cent, respectively.