Easy come, easy go. The foreign institutional investors (FIIs), which had been responsible to such a large extent in generating the gains notched up by Indian markets in the recent bull run, have suddenly liquidated huge amounts of their stock holdings, causing indices to fall precipitously.
Adding to the shock was that the domestic financial investors too voted with their feet, as has been their penchant for this month at least.
While records were generated on the upwards march, the fall too has chronicled a similar occurrence with the Sensex plummeting by 2.9%, or 437.63 points, to 14,665.92 points, which is its third-biggest fall in 2009.
The carnage on the National Stock Exchange was worse as Nifty fell by as much as 3.42% or by 157 points to 4,429.90 points.
While foreign cues, US and European markets were again showing signs of weaknesses followed by Hang Seng and Straits Times, were the day’s first pointers to negative trends, still the extent of the effect on Indian bourses could not be forecast till it was actually visible later in the day’s trading.
However, the rally in the stock market and the recent appreciation in rupee value has managed to bring 51 new members to the elite billion-dollar market-value club, while doubling its overall valuation since October when the benchmark index had dropped below the 8,000-level.
The rise in the number of companies in the elite club since the October lows was caused by a movement in the stock market that has gained over 96 per cent in the past seven months and an appreciation in rupee value by 5.4 per cent.
Interestingly, the cumulative market value of the club currently stands at about Rs 42,34,171.25 crore as on June 5, more than double of its value in October last year of about Rs 20,41,029.8 crore.
To an extent there was panic selling since the exit by FIIs triggered a sell-off amongst Indian traders too. Among the worst performers were metals stocks.
Amongst the gainers today on the Sensex were just three stocks, Wipro, Infosys and TCS, while the rest of the 27 scrips fell. Leading the fall were Jaiprakash Asso. (-11.2%), DLF Ltd (-10.8%), Tata Steel (-10.8%), Reliance Comm (-9.5%), and Reliance Infra (-9.0%), all of whom hit the circuit down.