Sensex slumps 241 pts as speculators pull down market

Sensex slumps 241 pts as speculators pull down market
ENS ECONOMIC BUREAU

MUMBAI, FEB 23: It was blood-bath again on the stock markets. After taking Bombay Stock Exchange Sensex above the 6,000 level on Wednesday morning, speculators pulled down the market in a massive sell-off which saw the fancied index crashing intra-day by 392 points. Rumours that the market regulator SEBI may take measures to curb the large outstanding positions affected sentiment and forced widespread liquidation in stocks.

Making a mockery of market regulator SEBI's claims of stability and lowervolatility, the benchmark Sensex crashed by about 392 points from its early high in the wake of frantic selling triggered by host of negative factors. The benchmark fluctuated wildly in the highest ever range of 421.43 points during trading and closed with the sixth largest fall of 240.87 points or 4.09 per cent. Reeling under sustained unloading, infotech, cyclical, pharma, media and telecom stocks suffered huge ersosion in values.

Operators said the net outstanding positions on the BSE rose to a record that stood at about Rs 4700 crore, fears of hefty hike in petroleum products to meet the country's huge crude oil bill and margin system that had put heavy burden on operators as adverse factors led to the crash. The market was also shaken by speculation that temporary overdraft facility by banks to brokers had been withdrawn.

An official of the Securities and Exchange Board of India (SEBI) denied the rumour about fresh curbs and said no new measures were being taken. Analysts said investors also booked profits after the rise in select stocks seen in the last few days. Consumer goods firm Hindustan Lever erased some of the gains seen in last two days and fell on profit taking after the company announced its 1999 earnings. The share closed Rs 34.25 lower at Rs 2,870. Other big losers in the index were Infosys Technologies down Rs 799.15 at Rs 9,190.85, ITC Rs 76.90 at Rs 884.60, Reliance Industries Rs 12 to Rs 329, Ranbaxy Laboratories Rs 67.90 to Rs 958.10 and Larsen & Toubro Rs 28 to Rs 357.

Infotech counters faced massive unloading and shares fell like nine-pins. Major losers in the infotech sector were Wipro Rs 708.30 at Rs 8,145.80, Mastek Rs 457.75 to Rs 5,264, Satyam Computers Services Rs 383.75 at Rs 4,913.10 and Hughes Software Rs 319.70 at Rs 3,677.05. ``Most of the IT stocks which were soaring till Tuesday crashed as operators unloaded on a broad front,'' said an NSE dealer.

Sensex (BSE sensitive index) opened sharply up at 6002.49 and moved in a range of 6033.98 and 5612.55 reflecting wide movements in heavy weighted stocks like Hindustan Lever, Infosys Tech, Reliance and NIIT before closing at 5642.46 as against yesterday's close of 5883.33.The BSE-100 index also tumbled by 179.09 points to 3583.27 from previous close of 3762.39.

The stock crash had come at a time when foreign institutional investor (FII) inflows were at their peak. Net investments by FIIs have crossed the $ 500 million mark in the current month, which translates into the largest inflow in the last one year in a single month.

WIPRO CRASHES FURTHER: Wipro stock (two-rupee share) on Wednesday fell eight per cent to Rs 8,145.80 as soon as trading started at the Bombay Stock Exchange. On Tuesday too the share fell eight per cent from a record Rs 9,800 in what dealers said was a ``technical'' correction.

Until Tuesday, the Wipro share witnessed a dizzying rise for eight successive trading sessions hitting the eight per cent upper end of a circuit-breaker set by the SEBI. They said the share had become grossly overpriced after its recent nine-day rally that ended on Tuesday, when retail investors started selling at the peak price. "I think a lot of shareholders were waiting for the peak price and have now decided to sell," said a dealer.