Sensex drops 132 points on US debt worries

In highly volatile trading, stock markets opened with huge losses but staged a smart recovery, wiping off all the losses by mid-day and moving into the positive territory.
However, they plunged back into the red.

After opening 472 points down this morning, the Sensex widened its loss to 558 points within minutes. Thereafter, it recovered more than 700 points from early morning lows and was trading with a gain of over 100 points at one point.

However, it soon moved back into the red zone with over 300-point loss and after partial recovery closed 132.27 points down at 16857.91 points -- lowest close since June 9, 2010.
Marketmen said that Finance Minister Pranab Mukherjee's assurance about strong fundamentals of Indian economy, and Capital Market Joint Secretary Thomas Mathew's assertion that FIIs were unlikely to resort to heavy selling, helped the brief recovery but finally the negative global cues prevailed.

They said market would wait for the policy meeting of US central bank, scheduled for later tonight, in hope of some announcements aimed at boosting investor sentiments.

The global markets have been in a turmoil for past two days, after the creditworthiness of the US was downgraded by Standard and Poor's amid the American economy's mounting debt worries. The debt problems in Europe have already been hammering the market for about a week now.

During the intra-day trade, the Sensex dipped to 16,432 points - its lowest since June 1, 2010. During its brief uptrend, it regained the 17,000-level to scale a high of 17,135.04 points.

The Bombay Stock Exchange 30-share index, Sensex, has lost 1,454 points in the six straight trading sessions.

Another benchmark, National Stock Exchange's 50-scrip Nifty, touched a low of 4,946.45 points, lowest since May 27, 2010, before closing 45.65 points down at 5,072.85 -- the lowest close since June 9, 2010.

Tata Steel, Tata Motors, TCS, Infosys, Wipro and Coal India were among biggest losers, while stocks like RIL, ICICI Bank and Hindalco also lost substantially.
However, stocks like M&M, DLF, ITC, HDFC, ITC, Maruti and ONGC managed to record smart gains on a volatile day.

The overall market breadth was still very negative with nearly two-third of all listed stocks recording losses.

Oscillating between alternate bouts of rise and fall, the Sensex traversed a path of more than 2,000 points, leaving the traders and investors in a tizzy.

Experts said the brief recovery was mostly due to positive openings in European markets, which later pared their gains and the trend got reflected on the Indian bourses.
The overnight meltdown in the US and the subsequent fall in Asia this morning added to the woes of Indian bourses.

"The US Fed has a crucial meeting tonight with a possibility of announcing some measures to sooth investor’s confidence. The outcome of the meeting is likely to affect the short term sentiments of the world markets including India," Shanu Goel, Senior Research Analyst, Bonanza Portfolio said.