Sensex dips 499 pts, bankex tanks

MUMBAI: On a day when Dalal Street investors were expecting the sensex to touch the 30K mark for the first time in history, the market sprang a surprise and plunged almost 500 points. After rising to a high of 29,802 in early trade, a selloff in banking stocks and profit-booking across sectors pulled the sensex down by 499 points which closed at 29,183.Strong selling by FIIs, who recorded a net outflow of Rs 772 crore and reversed a 10-session streak of net inflows, was also responsible for the 1.5% slide in the sensex, dealers said. The day’s session also reversed a 10-session rally in the market during which nearly 2,200 points were added to the sensex.
Banking stocks, mainly the public sector ones, were hammered on worries about rising NPA levels. During the day, Bank of Baroda announced its results showing more slippages and rising bad loans. The stock closed 11% lower. Among the sensex stocks, SBI was the top loser closing 5.1% lower at Rs 310, while ICICI Bank closed 5% lower at Rs 361. On the BSE, banking index was the worst hit among the sectoral indices, which closed 3.1% lower.
However, not many on the Street are worried about the day’s selloff and believe such corrections are healthy for the bull rally to continue. “We feel it’s a healthy correction after the recent advance in the index and it may extend further,” said Jayant Manglik, president-retail distribution, Religare Securities. Manglik believes that for the Nifty, which closed 143 points lower at 8,809, the 8,600-8,650 band is a crucial support level. According to him, the 8,950-9,000 band will continue to act as a hurdle in its northward move.
The day’s session also witnessed Coal India closing 3.8% lower as the government sold 10% of its stake in the company to mobilize about Rs 22,500 crore to partially meet its divestment target. The day’s slide also left investors poorer by about Rs 1.1 lakh crore with BSE’s market capitalization now at Rs 103.3 lakh crore.