St slide longest since Nov ’08

The local equity market has logged its longest losing streak in three years as a worsening domestic situation and global worries weigh on sentiment, forcing investors to panic-sell.

The Sensex on Monday fell 425.41 points, or 2.6%, to close at 15946.10, while the Nifty closed well below the 4800 mark at 4778.35. The Sensex has now shed 1623.43 points over eight straight sessions of loss —- also the biggest losing streak since November 20, 2008, when the Sensex had lost 2085.15 points over seven sessions.

Experts attribute the sharp fall in the markets on Monday to weak global cues. 

“Indian markets saw an impact of Europe when their markets opened following Moody’s warning on the French rating outlook. Also the lack of consensus on austerity measures in the United States has been another negative,” said K Ramanathan, chief investment officer, ING Investment Management India.

A US government committee has reportedly failed to reach an agreement on a $1.2 trillion (over `60 lakh crore) cut to the government budget, a move which may affect how rating agencies view the country’s creditworthiness.    

Mehraboon Jamshed Irani, principal and head - priority client group at Nirmal Bang Securities, feels things are getting worse on both domestic and global fronts.

“Though global problems are here to stay for some time, problems are increasing on domestic front with rupee depreciating much faster than the oil price, putting pressure on the government’s finances. What has made matters worse over the last two weeks or so is the change in attitude and language of people in power, who have also started talking negatively, highlighting the problems without offering any solution. This has made even the most optimistic investors go bearish on the markets. People have been engaging in basket-selling of portfolios in order to make up for margin calls in the derivatives segment.”

Foreign institutional investors, whose losses increase with a depreciating rupee, were net sellers by `743.02 crore on Monday, according to provisional exchange figures. They were net sellers by `905.3 crore in seven previous sessions.

The rupee fell to a 32-month low of `52.15 against the dollar on Monday.

Going ahead, experts fear further fall in markets in the near term if technical support levels are broken.

Indian markets could potentially slide a further 8% if the Nifty slips below its near-term support of 4700, said Shrikant Chouhan, senior vice-president at Kotak Securities. “The Nifty has been hovering in a broad range of 5150-4750 in recent times. If we break the 4700 support, the next target would be 4550, beyond which we could be looking at 4300,” he said.