Markets witness a free fall

20 Jun 2008 | 00:00
Markets witness a free fall

The markets opened on a flattish note this morning on the back of mixed global cues. However, post the announcement of the inflation numbers the markets starting falling sharply and ended near the lows of the day.
Inflation soared to a 13 year high of 11.05%, which was much higher than street expectations. The surge in inflation was due to rise in retail fuel prices. The government had raised retail fuel prices by about 10% on 4 June 2008 to help curb losses at its state-owned refiners, arising from surging global crude oil prices. High inflation increased fears of a tighter monetary policy. Selling was seen across all sectors.

While the Sensex closed down 516.70 points or 3.42% at 14,571.29, the Nifty lost 156.7 points or 3.48% at 4347.55. The broad market indices also participated in the sell off as the BSE Midcap and Smallcap indices lost 3.17% and 3.43% respectively. The market breadth was negative, as A/D ratio was 1:5 on the BSE. NSE cash turnover was Rs.12,069 crs. Vs. Rs.9,342.70 crs. yesterday.

All the BSE Sectoral indices ended in the red. The BSE Oil & Gas shed the most as it lost 5%. Ironically, the only gainer from the BSE -30 was oil and gas major, ONGC. Losers from the Sensex pack included Rel Comm, Reliance, Hindalco, Jaiprakash Associates and Rel Infra.

With the Nifty breaking the 4500 support levels quite easily, the markets are in a firm downtrend and seem to be headed lower in the days to come.
Traders can use any pullbacks to initiate fresh shorts. With respect to fresh Investment positions, it would be advisable to wait till the markets make a confirmed bottom.