Sensex Closes Below 3,000

The Bombay Stock Exchange sensitive index (sensex) today breached the 3,000-point mark at close, after a gap of 33 months with the foreign institutional investors (FIIs) turning sellers. The benchmark index closed down 1.49 per cent at 2,987.50 points, after moving in an intra-day range of 90 points. The last time BSE sensex closed below the 3000-mark was on December 24, 1998 (2,963 points).

On the National Stock Excha- nge, the S&P CNX Nifty was down 10.50 points to close at 971.70.

Most heavyweight counters, including Reliance Industries, Satyam, Larsen & Toubro ACC, Infosys, BHEL, ITC, Dr Reddy's, Cipla, Nestle and Ranbaxy, registered losses. Infosys Technologies closed at Rs 3,160.30, down 0.60 per cent from its previous close. The stock had shed nearly 10 per cent in the last two sessions on institutional selling pressure.

NIIT declined from a high of Rs 143.70 to Rs 135.70 before settling at Rs 137.35, down 1.89 per cent from its previous close, while Satyam Computers came off from an intra-day high of Rs 161.70 to a low of Rs 145 before settling at Rs 146.70, down 6.68 per cent from its previous close. Reliance Industries (down 3.19 per cent at Rs 289.95) and Reliance Petroleum (down 1.24 per cent at Rs 31.85) also slipped on selling pressure. Cement stocks, including Larsen & Toubro (down 5.51 per cent at Rs 181), Gujarat Ambuja (down 3.65 per cent at Rs 152), ACC (down 3.55 per cent at Rs 118.15) and Grasim (down 1.61 per cent at Rs 265.60), were weak in the absence of any buying support.

For the third consecutive day, the FIIs were reported as net sellers in the equity markets. According to figures released by Sebi, FIIs were net sellers to the tune of Rs 84.7 crore yesterday and Rs 5 crore on Tuesday. With the sustained FII selling pressure in the last three days, the total outflow of FII investments in the current month till September 12 has been Rs 74.5 crore ($15.68 million).

With today's losses, the Sensex has lost 244 points in seven consecutive sessions. The last time it gained during a day was on September 4 - a nominal four points. Since the beginning of the current financial year, Sensex has lost 15.23 per cent or 579 points and since the beginning of this calendar year, it has lost 24.79 per cent.

The turnover on BSE increased marginally from Rs 1,086.73 crore yesterday to Rs 1,0997.15 crore today and on the NSE, it increased from Rs 1740.01 crore yesterday to Rs 1798.90 crore today. On BSE, of the 1,203 shares traded, declines outnumbered advances with 600 losers and 477 gainers.

Rupee pierces 47.50 mark

Forex and money markets reeled under a fresh bout of nervousness and uncertainty today. The rupee once again tumbled against the dollar and pierced the 47.50 mark to close at a new low of 47.51/52 after hitting an all-time intra-day low of 47.58. Government security prices dipped in tandem with the weakening rupee, even as the markets fretted over the liquidity drain on account of the impending advance tax payments due September 15.

Forward premia went up sharply by 30-40 basis points across all maturities while the call money rates hardened to as high as 7.85 per cent. The six-month forward premia ended at 5.12 per cent (annualised) while the one-year premium closed at 5.30 per cent as against yesterday's closing of 4.68 per cent and 4.89 per cent, respectively.

Call money rates, however, came down a bit later on to close in the range of 7.15 per cent to 7.25 per cent. Government security prices fell by 10-15 paise on the back of the fresh weakness in rupee. The treasury head of a private sector bank said, "there was a lot of import covering today as the importers were not sure about the US situation. Moreover, supply of dollars for the past few days was also disrupted."

Forex dealers, however, said that once the rupee touched the 47.58 mark, the Reserve Bank of India supplied dollars through the nationalised banks. State Bank of India was seen selling dollars to ease the pressure.

A dealer with a foreign bank said, "In the morning hours, even some of the nationalised banks bought dollars. But, once the rupee touched the 47.58 mark, they came (back) with a huge supply (of dollars) to arrest the fall."

Dealers attributed the rise in the forward premia to a probable rate cut by the US Fed and a high call money rate and said that the fall in the government security prices was due to the imminent advance tax outflow along with the volatility in the rupee market.

Dealers are afraid that the volatility in the forex and money market will continue for some time. A dealer said, "these are all panic reactions as nobody knows how long it will take the situation to stabilise."