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Greek tragedy plays out on Dalal Street

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The Indian stock markets on Tuesday witnessed their worst single-day fall since 2009 as oil prices hurtled towards $50/barrel mark and Greece worries reared their head again.

In a volatile trade, the benchmark Sensex fell 855 points, or 3.07%, to end the day at 26987.46,while Nifty snapped 251 points or 3%, to close at 8127.35.

The plunge followed global bloodbath that began with Dow Jones plunging 331 points, or 1.87%, on Monday. The US index opened at a higher level on Tuesday, but soon gave away gains and was trading 90 points down late evening (IST).

In the Indian markets, massive selling was witnessed across sectors led by oil & gas, which slumped 4.17% followed by realty, metal, capital goods. All indices ended in red.

Among the individual stocks the biggest losers among the Sensex were ONGC (down 5.89), Sesa Sterlite (down 5.09%) and Tata Steel (down 4.88%).

Deven Choksey, CEO & MD at KR Choksey Securities, ''Global investors are trying to mitigate the losses on oil investments through sale of equities." He said crude would trade in a range of $50-60/ barrel in the near future.

Also, the worries over political situation in Greece cast a gloom on global markets. Investors are worried about a depreciation in euro on account of a possible exit by Greece from Eurozone and forming an independent currency, Choksey said.

Global investors including hedge funds are overweight on India as a result they are trying to balance their portfolio with other countries, said Choksey. The MSCI has a weightage of 8% on India while some funds have an exposure of 16-20%.

The initial fall in price of commodities was rejoiced by the markets, but a continuous decline has led to a sentiment of plunge in demand.

''Lesser demand for industrial products will lead to concern among investors because it possibly reflects a slowdown in the overall economy'', said Jagganadham Thunuguntla, head of research at SMC global Services Ltd.

He expects the Federal Reserve to increase rates in the first half of this year. Thus, in anticipation of a rate hike in the US other currencies across the world including rupee may weaken, having a negative impact on equity markets.

Vinod Nair, head-fundamental research, Geojit BNP Paribas Financial Services Ltd, said, ''In the beginning of the year, India and China outperformed their peers, thanks to the influx of liquidity in China and the expectations from Gyan Sangam (bankers' conclave) and the reforms push by the government.'' There were expectations of a change in the holding structure of the PSU banks. "Post the conclave the clarity is still awaited on the announcements made," he said.

Prashant Prabhakaran, president, retail broking, India Infoline said in the near future the offer for sale by selected PSUs will suck in liquidity worth Rs 20,000-25,000 crore, thus bringing a churn in the existing stocks holdings. He sees Nifty staying range-bound at 7900-8100 till the Union Budget 2015.

As per analysts, the quarterly earnings will be the next trigger for individual stocks but market direction will hinge largely on global market movement.

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