Sensex Ends Below 18,000; Lowest Level In Almost A Year

The BSE Sensex fell nearly 2 per cent on 21 August' 2013 to close at its lowest in almost a year as blue chips slumped on fears of foreign investor selling after the rupee hit new lows ahead of a US Fed report that may give details of its stimulus policy.

 

Shares failed to hold on to nearly 2 per cent gains seen earlier in the day after the Reserve Bank of India eased cash and bond holding rules for banks on 21 August' 2013.

 

Analysts said the market was losing confidence in the central bank's policies as its steps to ease cash, bond holding rules on Tuesday deviated from its earlier stance of tightening rupee liquidity.

 

Foreign institutional investors (FIIs) have turned net sellers of shares in August, looking to extend their selling streak for the third consecutive month.

 

"First, the central bank needs to clarify its policy direction and second, the FIIs have not been aggressive sellers as yet and that will play out once news over QE tapering unfolds," said Sahil Kapoor, assistant vice-president of retail capital markets at Edelweiss Financial Services.

 

The BSE Sensex fell 1.86 per cent, or 340.13 points, to end at 17,905.91, marking its lowest close since September 11.

 

The Nifty fell 1.83 per cent, or 98.90 points, to end at 5,302.55 after earlier rising as much as 1.9 per cent on the RBI's steps to ease cash and bond holding rules.

 

Among blue chip stocks, ITC Ltd slumped 4.6 per cent while Reliance Industries Ltd fell 5.1 per cent.

 

Shares of IT majors fell on concerns about their valuations relative to the market and on fears that the rupee may regain some of its recent losses as it looks oversold at current levels.

 

Infosys Ltd fell 1.5 per cent while Tata Consultancy Services Ltd ended 1.1 per cent lower.

 

Most bank stocks were not able to hold on to gains made after the central bank eased cash and bond holding rules late on Tuesday.

 

Book value or net worth of state-owned banks would become more opaque after the Reserve Bank of India eased bond holding rules, Morgan Stanley said in a report on Tuesday.

 

State Bank of India Ltd fell 0.4 per cent after earlier rising as much as 6.2 per cent while Canara Bank Ltd ended 4.6 per cent lower.

 

Among private sector banks, ICICI Bank Ltd fell 0.1 per cent after earlier rising as much as 6 per cent, while Axis Bank Ltd ended 0.3 per cent lower after earlier rising almost 9 per cent.

 

However, the NSE bank share index edged up 0.5 per cent. Earlier, the index rose as much as 5.93 per cent, led by gains among banks whose bulk of lending activities are financed by wholesale deposits.

 

Yes Bank Ltd gained 5.1 per cent while IndusInd Bank Ltd ended 6.4 per cent higher.

(Reuters)