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Sensex hits 3-year low as negative sentiment rules
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Mumbai, March 5 The Sensex on Thursday plunged to its lowest in over three years as foreign institutional investors continued to sell stocks. The Reserve Bank on Wednesday cut interest rate but that did not enthuse the market either.

The benchmark index Sensex fell almost 3 per cent and closed at 8,197, a three-year low, while the broader 50-stock Nifty was down 2.59 per cent, closing at 2,576.

Even the seven-year low inflation rate of 3.03 per cent for the week ended February 21 failed to boost the market sentiment, said analysts.

“There is a total lack of confidence in the market, and the FII selling has intensified in the past few days,” said Mr Ajay Parmar, Head of Research, Emkay Global Financial Services.

Those sitting on the fence and were not sure whether to buy or sell till now, sold in a panic mode, he said.

The FIIs were net sellers of equities for Rs 591 crore, while domestic institutions were net buyers for Rs 479 crore on Thursday.

The buying support by domestic institutions too could not help the markets, said market-men.

The indices took a sharp dip after an initial surge and continued moving southwards, as shares across sectors came under the grip of relentless selling pressure, said Mr Gaurav Dua, Head of Research, Sharekhan Ltd.

The Sensex touched a low of 8,166 after opening at the day’s high of 8,535.

The marked drift into negative territory happened as the mood soured further due to the weak European markets as well as the falling rupee, said market men.

European shares fell in early trade on Thursday ahead of interest rate decisions in Britain and the Euro Zone, said market men. London’s FTSE, France’s CAC 40 and Germany’s DAX were trading in the red.

Among the Asian markets, Hong Kong’s Hang Seng was down by 0.97 per cent.

Globally there is a flight to safety and this is impacting the Indian market too, said Mr Prateek Agrawal, Head of Equity, Bharti Axa Investment Managers.

It is unlikely that the FIIs will commence any buying; it will be so at least till the new government is formed, he added.

The market breadth was weak with 1,686 stocks declining, while only 699 stocks advanced on the BSE.

In the sectoral indices, BSE-Bankex was down 4.15 per cent, BSE-Oil&Gas 3.71 per cent, BSE-Power 3.26 per cent, and BSE-FMCG 3.26 per cent.

The interest rate cut by the RBI has further worsened sentiments towards banking stocks as that sector will now be forced to give loans at lower interest rates, said Mr Vishwas Agarwal, an independent analyst.

Among the Sensex stocks, only five advanced, while 25 declined.

The rupee lost 25 paise against the dollar on Thursday, as the strong demand for the greenback was not met by adequate supply.

The rupee touched a low of 52.18 in day trade, as corporates and foreign banks bought dollars. However, dollar selling by the RBI helped the rupee to recover and close at 51.78/80 against the previous close of 51.54.
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