Sensex dips to two-month low on weak global trends

Stocks fell today on sustained selling by funds on the BSE, dragging down the benchmark. Sensex further lower by 104 points to a two-month low. The Sensex, which had lost nearly 9.5 per cent during the past week, extended losses by dropping 103.90 points at 13,400.32, a level last seen in early May. The key index touched the day's low of 13,219.99 and a high of 13,461.68 points.
    
In a similar fashion, the 50-share National Stock Exchange index Nifty dropped by 29.85 points at 3,974.05, below the psychological 4,000 point level. The market remained volatile and recovered from its early lows on operators shortcovering and buying by domestic institutional investors after European stocks cut losses in late morning trade. European markets were virtually flat after a weak start.
    
The plunge was led by Tata Steel and other metal producers after commodity prices fell on concerns that government measures may not be enough to revive economic growth. A weakening trend in Asian stock markets fuelled the falling trend. Japan's Nikkei fell 2.55 per cent, Hong Kong's Heng Seng 2.56 per cent and Singapore's Strait Times 1.79 per cent.  The MSCI Asia Pacific Index dropped 2.5 per cent, the most since May 14. The index has lost 6.7 per cent from an eight-month high on June 12 as optimism on global economic recovery declined.
    
Investor sentiment was adversely affected by sustained pullout by foreign institutional investors (FIIs), which sold shares worth Rs4,037.64 crore in July. The market turned extremely cautious ahead of the first quarter corporate results after several equity research firms expected India Inc to do badly in April-June.
   
A surge in information technology stocks also cushioned the falling trend. The IT sector index rose by 1.76 per cent to 3,252.25 and the teck index by 0.15 per cent to 2,490.50. Consumer durables suffered the most, losing 5.68 per cent to 2,611.47, followed by metals, by 3.77 per cent to 9,735.68.

Realty lost 3.77 per cent to 2,738.35, auto 2.57 per cent to 4,449.97, power 2.39 per cent to 2,541.03, capital goods 2.39 per cent to 11,021.64 and oil and gas 1.08 per cent to 8,441.16.