Bears maul bulls at Dalal street
Panic after technical glitch, rising crude, FIIs anger pull down markets; Sensex loses 722 points
By : DC Correspondent
Update: 2015-05-07 01:58 GMT
MUMBAI: The equity markets nose-dived on Wednesday to close at their lowest level in 2015 as growing concerns regarding weak corporate earnings, spike in global crude oil prices and retrospective taxation triggered broad based selling in equities. Investors wealth of Rs 2.8 lakh crore was wiped out in a single day. The imposition of tax on subsidies in the Finance Bill also didn’t go down well with market participants.
However, senior analyst Ambareesh Baliga said there were rumours in the markets that wrong execution of a few algorithm trades caused a collapse in the Nifty and requires to be investigated. Registering its biggest fall since January 6, 2015, the Sensex plunged 722.77 points or 2.63 per cent to end the trading session at 26,717.37, while the Nifty tanked 227.80 points or 2.74 per cent to end the day at 8,097.
According to dealers, the slow pace of economic reforms in India has further caused some kind of disappointment among global investors forcing some of them to review their strategies in the Indian markets. They added that that any fall below the 8,000 level mark for the Nifty in coming days would lead to the closure of leveraged positions in the market, which could trigger another round of sell-off in the markets.
“The corporate earnings growth failed to live up to expectation. The bottom line of Sensex companies grew by just four per cent during the March quarter as against the 9-10 per cent growth expected by the market. Further the global crude oil prices flared up again due to the crisis in Middle East, which is not a good sign for India. So short-term investors who were sitting on huge profits are offloading some of their holdings in the Indian market,” said Dinesh Thakkar, founder chairman, Angel Broking. According to the provisional data from the stock exchanges, foreign portfolio investors offloaded shares worth Rs 1,699.60 crore on Wednesday.
“FIIs are withdrawing money from the Indian markets to invest in IPOs in China. Around $175 billion of IPOs are lined up in China during this week,” said Deven Chok-sey, MD of K.R.Choksey Securities.
“There was some kind of basket selling in the Nifty during the early trade, which caused panic in the market. If the Nifty fails to sustain above the 8,000 level, we can expect further selling in the Indian markets,” said Udaya Narayan Dubey, vice-president, institutional desk at R.K. Global Securities.