F&O can compound the CRASH

MUMBAI: Three sessions after clocking its fifth-biggest fall ever, the Sensex crashed to its third-biggest, plunging past the psychological 15000 mark as a wave of selling enveloped the globe.

Market mavens are unwilling to predict a bottom yet. Some late relief came as US shares bounced back with the Dow Jones rising 63 points at 10.30 pm (India time) as better data on home sales and manufacturing eased concerns over a housing-slump led pandemic.

The local refrain, nevertheless, is that the Sensex may test more troughs in the coming days. “The pain is not over yet. The problem in the US is not over and the ripple effect in emerging markets and Asia will continue,” said Ketan Karani, head of research at Kotak Securities.

For the record, the Sensex plunged 615.22 points or 3.96% to settle at 14,935.77.
While the pulling out of strong hands on global cues caused the fall, the weaker ones crumbling on margin calls could accentuate the trouble further in the next few sessions.
Marketwide open interest in the futures market stood at a staggering Rs 80,875 crore on Wednesday.

This is 25% higher than average open interest seen on the first day of the previous six months.