Mumbai: Markets fell by more than 2% breaking a string of three-week rally after the key indices Sensex and Nifty hit recent lows on heightened worries that Dubai debt crisis may impact adversely the financial system.
The BSE 30-share index Sensex plunged to a three-week intra-day low of 16,210.44 points on Friday as global markets were rattled by Dubai problem, raising fears about the capital outflows and corporate exposure.
Eventually, the market bounced to end just above the 16,600 strong support level, propelled by a massive salvage operation from domestic institutional investors.
The Sensex settled at 16,632.01 points on Friday, down 389.84 points, or 2.29% from last weekend’s close.
Similarly, the National Stock Exchange’s Nifty also ended below 5,000 level at 4,941.75, netting a loss of 110.70 points, or 2.19%, from its previous weekend’s close.
Hitech Securities director Sanjay Bhambri said the market has shown greater resilience and is expected to be much higher than the levels seen in this week.
The market has strong support at 16,600 level but gets resistance above 17,000 mark.
During the week, the market witnessed high volatility as investors roll over positions to December series at the end of the expiry of November contract of the Futures & Options.
Markets still seem bullish with the government setting a priority for reforms in insurance sector in the winter Parliament session. It has also ruled out withdrawal of economic stimulus packages for one year and imposition of tax to curb the capital inflow.
However, the rising inflation is seen as one of the impediments for the market surge as higher inflation could prompt monetary action.
India’s largest private sector firm - Reliance Industries - was down about 1% on its ex-bonus price this week. Realty stocks bore the brunt of selling. Realty major DLF fell by 6.44%.
India’s largest private sector lender ICICI Bank dropped by 5.13% and largest public sector commercial bank SBI by 3.99%.
IT stocks too tumbled after their recent rally. Infosys Technologies dipped by 4.09%, Wipro by 3.86% and TCS by 3.13%.
During the week, trading volumes on BSE and NSE were almost steady at Rs23,833 crore and Rs78,979 crore against last week’s turnover of Rs24,992 crore and Rs77,082 crore respectively.
Auto stocks such as Hero Honda spurted further by 5.70% and Maruti Suzuki by 1.40%. Hindustan Unilever gained 2.62% and ACC 3.32%.