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Sensex down 157 on war fears

Our Bureau

MUMBAI, Sept. 14

STOCK prices plunged further and the rupee weakened on Friday following unabated selling pressure by foreign institutional investors (FIIs). Equities tumbled for the third consecutive day amid heavy selling by hedge funds in their flight to safety, pulli ng down the benchmark intra-day to an eight-year low.

The massive sell-off has been attributed to possible US retaliation after the unprecedented terrorist attacks on American targets three days ago.

Uncertainty prevailed ahead of the weekend with regard to the possible US response and the likely behaviour of US markets when they reopen on Monday. Neither the FIIs, local institutions nor the traders were willing to take positions before the weekend, dealers said.

With large-scale selling by FIIs and retail investors, in the absence of any major buying force from the local institutions, the benchmark BSE-30 shares Sensitive Index (Sensex) spiralled down to touch an intra-day low of 2,770, close to the eight-year l ow of May 1993 during the no-trust vote against the P.V. Narasimha Rao Government.

``Nervousness in the stock prices reveal panic among investors that something wrong is round the corner,'' Mr Vijay Bhatia, Vice-President (Institutional Sales), Kotak Securities, said.

The Sensex opened near its previous close and dropped 7.8 per cent to hit the nadir of 2,770. It recovered slightly towards the latter half of the session, netting a loss of 157.38 points, or 5.27 per cent, over the previous close.

At the NSE, the S&P CNX Nifty shed 52 points, or 5.3 per cent, to close at 919.7. The Japanese benchmark, Nikkei-225, staged a recovery to 10,008, gaining 4.1 per cent over its previous close while the Hang Seng made a modest recovery of 86 points to clo se at 9,655.

Many bluechips continued to record new lows notwithstanding the tightened circuit filters imposed by the Securities and Exchange Board of India (SEBI) on Wednesday. FIIs were reported to be major sellers in the index heavyweights. Market heavyweights -- RIL and RPL -- dropped nearly 10 per cent while NIIT, Zee Telefilms and Cipla fell over 8 per cent.

Technology stocks such as Wipro, HFCL, Global Telesystems, DSQ, HCL Technologies, Aptech, SSI and Mastek shed between 11 and 16 per cent.

FII selling not only hit the equity prices, but also led the rupee to fall about 26 paise to close at Rs 47.81/83 to a dollar, as demand increased for the greenback, the dealers said.

Nervousness was reflected as more number of scrips declined than that advanced. Of the 176 `A' group scrips, 9 advanced while 167 declined.