The Hindu Business Line : Sensex trims early losses, ends 232 down

‘Short covering’ and ‘value’ buying, especially in IT and consumer durables stocks, saw the index shrug off partially, the market’s ‘US sub-prime’ woes.

Our Bureau

Mumbai, Aug 10 The Indian market continues to be impacted by global uncertainties.

Responding to the Dow closing lower on Thursday at the New York Stock Exchange, the market suffered further losses on Friday. The benchmark BSE Sensex was down by 231.9 points to close at 14,868.25 today.

The Sensex opened 425 points lower at 14,675 to fall further to an intra-day low of 14,571 in early session deals. However, ‘short covering’ and ‘value’ buying, especially in information technology and consumer durables stocks, in the afternoon session saw the index shrug off, at least partially, the market’s ‘US sub-prime’ woes.

Sub-prime mortgages are the riskiest property loans, often extended to people who have payment difficulties or a bad credit history.

But the recovery, such as it was, was not good enough and the index closed the day at 14868.25, down 1.54 per cent from the previous day. On the BSE, market breadth was negative as 1016 stocks advanced while 1597 stocks declined.

“Panic selling has been triggered in the Indian market on unconfirmed reports that the sub-prime crisis has started affecting other European banks as well,” said Mr N.V. Shah, Director, NVS Brokerage.

Central banks globally are pumping a lot of money to ensure liquidity, which clearly suggests that there is a problem, said a senior official from a Mumbai-based asset management company. Market players believe sentiments continue to be weak as the actual size of the sub-prime problem is not known. “Stability will be back in the global markets only when there is complete dissemination of the depth of the problem. We will have clarity as more information about the size of the crisis starts trickling in the next few days,” said Mr Anil Advani, head of research, SBICAP Securities.

Even though the sub-prime crisis does not have a direct impact on the Indian equity markets, it has affected the flow of funds into India, said Mr Shah. Banking stocks witnessed a steep fall. Except information technology, all sectoral indices registered losses. IT registered gains as the rupee marginally weakened against the dollar to close at Rs 40.63/64 today, said Mr Vishwas Agarwal, Technical Analyst.