sensex misses 18K

Prospects of a general election ahead of schedule led to hectic selling in the market on Monday. As a result the sensex lost 282 points to close at 17,491. The day also witnessed huge volatility with the BSE barometer gyrating 660 points in intra-day trades. In the process, in early trades, the index also made a new top at 17,983.
But despite the sharp profit-taking in the market on Monday, not everyone was complaining. ‘‘The markets had gone up in a hurry over the past month and needed a healthy correction. It needed a reason to correct and the political situation provided one on Monday,’’ said Seshadri Bharathan, director, stock broking, Dawnay Day AV. Since its mid-August close at 13,989, the sensex had gained a little over 27% to its all-time closing high at 17,847 on October 3, driven mainly by fund flows from FIIs.
The jitters were more pronounced among retail investors which led to severe profit-taking in mid-cap and small-cap stocks. While BSE’s midcap index ended 3.7% lower, the smallcap index shed 3.3%. The day’s slide made investors poorer by about Rs 1.3 lakh crore with BSE’s market capitalisation now at Rs 53.7 lakh crore.
Among top sensex losers were steelmaker Tata Steel, which ended 5.3% lower at Rs 789 and Reliance Energy losing 4.7% to Rs 1,379.5 on profit-taking. Among other frontline stocks SBI shed 4.3% to Rs 1,783, real estate major DLF fell 1.5% to Rs 839.1, notwithstanding the news of its inclusion into the sensex from November 19.
Banking, metals, real estate and PSU stocks fell while software stocks rose marginally ahead of the quarterly earnings season due to be kicked off by Infosys this Thursday. Infosys ended marginally up 0.5% to Rs 2,000.45.
Going forward, market players feel the unfolding political situation could be the main driver for the market.
‘‘For some time the political situation was largely being ignored by the markets, which is something one cannot afford to do,’’ said Karvy Stock Broking VP Ambareesh Baliga.
‘‘The current rally is being driven by liquidity and FIIs will think twice before investing in markets with any instability. There are fresh noises coming from Delhi over the nuclear deal and this could spook FIIs from investing in the market, at least for a while,’’ Baliga added.