Sensex on free fall, closes 388 points down

MUMBAI: The stock market was once again hurtled into bear orbit by panicky investors but the benchmark Sensex, which dipped by 674 points at one point, managed a partial recovery thanks to better-than-expected 8.4 per cent economic growth in 2005-06.

Finally, the market ended with a loss of 388 points to close at 10,398.61. According to marketmen, the market has re-entered the bearish phase and most of them were reducing their positions to minimise losses.

Initially, the global meltdown and sustained FII outflows caused panic among investors with no buyer in sight in the first half of session and the Bombay Stock Exchange (BSE) 30-share sensitive index (Sensex) crumpled to the intra-day low of 10,111.96, a huge fall of 674.64 points.

News of a 8.4 per cent GDP growth in 2005-06 coupled with hectic short covering by Foreign Institutional Investors (FIIs) helped the market recover partially.

The National Stock Exchange (NSE) S&P CNX Nifty also fell by 114.25 points or 3.59 per cent to 3,071.05 from previous close of 3,185.30.

The sharp downslide was attributed to a world-wide crash in equity as well as a massive pull out by FIIs, which have been net sellers since May 15.  As per figures released by the Securities and Exchange Board of India (SEBI), FIIs have withdrawn over Rs 7,500 crore in the last 12 trading days.