Sensex spooked by China, CRR hike fears, down 490 pts

Global cues and fears of tightening monetary measures by the central bank pulled down the benchmark BSE Sensex 490.6 points (2.92 per cent), marking the sixth day the market has been in a bear grip.

The Sensex closed at 16,289.82 points and the NSE’s S&P CNX Nifty at 4,853.10 points (down 154.8 points or 3.09 per cent), led by stocks like SBI, ICICI Bank, Tata Motors, Mahindra & Mahindra and DLF.

Including today, the key indices have fallen 8 per cent in the last six trading sessions. The fall, however, coincided with a rise in trading volumes both in the derivatives and cash segment. NSE’s derivatives turnover touched an all-time high of Rs 1,58,504 crore.
 

GLOBAL BEAR HUG
	27-Jan	% Chg*
ASIA
SET	690.46	-1.60
Straits Times	2,706.26	-1.24
Shanghai Com.	2,986.61	-1.09
Kospi	1,625.48	-0.72
Nikkei 225	10,252.08	-0.71
Taiwan Taiex	7,560.03	-0.51
Hang Seng	20,033.07	-0.38
EUROPE#
CAC 40	3,759.80	-1.24
FTSE 100	5,217.47	-1.13
DAX	5,643.20	-0.45
AMERICA (JAN 26)
S&P 500	1,085.94	-0.57
Nasdaq Com.	2,194.87	-0.40
Dow Jones	10,137.84	-0.55

“The selloff has been triggered by the credit tightening initiatives taken by China, which has raised concerns on the sustenance of high growth,” said Dinesh Thakkar, Chairman and Managing Director, Angel Broking. But he said the current correction provides an opportunity to investors to gain exposure to equities.

“The fall is mainly due to the global factors and not much to with the corporate results,” said Jigar Shah, senior vice president and head of Research at KIM ENG Securities India. Today’s fall, he added, was more than expected.
 

TOP LOSERS
Tata Steel	558.70	-8.48
DLF	317.05	-7.83
Tata Motors	716.00	-6.80
Wipro	654.50	-5.79
Hindalco	150.10	-5.66
Mah & Mah	1,011.90	-5.64
Maruti Suzuki	1,368.95	-5.28
SBI	1,987.15	-5.07
ICICI Bank	790.20	-4.98
Hero Honda	1,549.35	-4.24
ONLY GAINER
ITC	255.85	0.39
Share Price in Rs on BSE *over previous close # at midnight

A build-up of fresh short positions in the derivatives market aggravated the fall. Dealers and traders said at several broking firms said Hong Kong-based hedge funds created fresh positions resulting in a discount in the February series of Nifty of 9.4 points to the spot index compared to a premium of 1.9 points on Monday.

Other than global factors there is also concern over the tightening of the excess liquidity in the system in the quarterly policy review by Reserve Bank of India on Friday. The consensus among the economists and analysts is that the central bank could raise cash reserve ratio by 25 basis points.

Shah of KIM ENG said with today’s fall banking, cement and metals stocks have become attractive.