The stock market went on a roller-coaster ride once again, keeping investors on the tenterhooks. After the wobbly Wednesday, the market witnessed choppy trade on Thursday, swinging between positive and negative zones. Heavy selling towards the latter part of the trading session pulled the benchmark Sensex down by 717 points.
Shrugging off concerns arising from the Securities & Exchange Board of India’s (Sebi) proposal to clamp down on FII inflows through participatory notes (PNs), the market surged to an all-time high in early afternoon trade. The Sensex rose by 483 points, hitting an all-time peak and wiping out Wednesday’s losses completely.
But bears roared back into action soon and stocks started tumbling. The widely tracked index even plunged 944 points at one stage. The Sensex finally closed at 17.998.39, down 717 points or 3.83 per cent. The Sensex swung 1,428 points in highly volatile trade today. The market was agog with rumours that the National Stock Exchange (NSE) had raised some futures and options margins, prompting many traders to press the sell button. However, the NSE did not announce any such hike in margins. Dealers said the the market will take a few days to stabilise following the Sebi move to curtail FII inflows through the PN route.
“With very little headroom available considering that existing p-notes are already 34.5 per cent of assets under custody, the proposals may significantly reduce incremental flows in the next 3-6 months,” said Rohini Malkani, economist, Citigroup India. According to brokerage Motilal Oswal Securities, Sebi’s recommendations on PNs are clearly negative in the extreme short-term as far as direction of FII inflows to India are concerned. FIIs pulled out $440 million from Indian stocks on Wednesday when the Sensex plunged over 1,700 points intra-day and later staged a recovery. This is the first withdrawal of funds by FIIs in the last one month. FIIs had invested close to $6 billion in October alone, sending the Sensex to new peaks before Wednesday’s mayhem.
Banking, metal, real estate and power stocks led the selling spree on Thursday. “Markets continued with the previous trend of making history every day. Today’s wild index movement will always be remembered in future as one of the most volatile trading sessions,” said Prashant Bhansali, director, Mehta Equities.
