The Hindu Business Line : Sensex loses 334 in see-saw trade

The stock markets went in for yet another roller coaster ride, with the BSE Sensex witnessing an almost 431-point swing intra-day (high-low) to close weak at 9,476.15, losing 334.31 points or 3.4 per cent, thereby retracing most of its gains made on Friday.

The Sensex has lost 25 per cent from its May 10 peak. The S&P CNX Nifty fell by 89.45 points or 3.2 per cent to close at 2,776.86.

Mid-afternoon trades almost witnessed a revival in market sentiment on the back of reports that industrial production rose 9.5 per cent in April compared to 8.1 per cent last year on account of the double-digit performance by the manufacturing sector.

Manufacturing, which occupies over two-third weight in the Index of Industrial Production, registered a growth of 10.4 per cent in April 2006, over 9.2 per cent for the same period last year.

Reports that FIIs had been net buyers for the last five days also seemed to aid in the small recovery.

However, selling pressure overruled, dragging the indices down. Dealers said that there was no comfort at higher levels. "The market is in a selling spree. No one wants to hold positions," said an institutional dealer.

Brokers said the markets were mirroring global market weakness brought about by inflation and rate increase worries. The market breadth was weak, with losers outpacing the gainers by 2:1. Metal, banking, cement, construction, auto stocks all closed weak today.

Select scrips gain

Reliance Communication, which replaces Tata Power in the Sensex today, fell by almost 6.38 per cent today to close at 206.80 on the BSE. But select small to mid-cap counters such as Radico Khaitan, Strides Arcolab, Ponni Sugars and Bombay Rayon posted gains.

Concerns over liquidity and mutual funds redemption are dogging market sentiment. "Liquidity is going to tighten. The easy availability seen over the last two years is not going to remain. And with commodity prices ruling high, corporate numbers will not look too attractive. Added to this there have been rumours of a leading mutual fund calling up to stop redemption. There is total withdrawal of buying interest," said a dealer.

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