Nifty freefalls, closes below 4600; realty, metal dip 6-9%

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The Nifty saw a sharp sell-off today and inched back towards the 4500 level for the first time in two months. It fell for the sixth consecutive day on huge volumes and closed below psychological - 4,600 mark for the first time since August 21, 2009. Huge shorts build up and weak global cues hammered the equity benchmarks. High beta stocks were beaten down badly.

The benchmark indices tumbled in the second half post European opening and fall in the US index futures. At the time of writing this report, European markets were down nearly 2% on the back of selling in financial stocks. UBS was the main trigger, as it posted loss in the Q3CY09 on the back of higher accounting charges and heavy withdrawals from big clients. It lost over 4%. Lloyds Banking Group is going to raise 13.5 billion pound and Royal Bank of Scotland (down over 2%) planned to sell-off some of its businesses.

Chris Wood, Equity Strategist, CLSA, said the chances of a deeper correction in global equities were rising.

Jim Walker, MD, Asianomics, too didn't see a V-shaped recovery in global equities. "If you look at the level of activity across the world from Europe to America to Japan to Asia, it is weak. It's a very weak recovery so far and as governments withdraw stimulus over the course of the next year, it is going to get weaker still."

Index	Closing Value	Chg (%)
REALTY	3,453.63	-9.76
METAL	13,110.68	-5.95
SMALLCAP	6,741.24	-4.5
OIL&GAS	9,047.91	-4.1
MIDCAP	5,789.49	-3.74
POWER	2,812.78	-3.49
IT	4,273.38	-3.44
CAP GOODS	12,462.02	-3.2
TECk	2,780.10	-2.64
FMCG	2,736.84	-2.57
BANKEX	9,156.16	-1.93
AUTO	6,235.73	-1.13
PHARMA	4,353.70	-0.54

The US index futures slipped nearly 1%. Asian markets ended lower barring Shanghai. Hang Seng and Jakarta slipped 1.6-1.8%. Straits Times and Kospi fell 0.6-0.9%. Taiwan Weighted lost 0.17%. However, Shanghai gained 1.2%. Nikkei was shut today.

Jon Greenlee, the associate director of the Fed's Division of Banking Supervision and Regulation, said US banks were at risk for sizable new loan losses, particularly on commercial property, and some banks may not have enough capital to fully cushion against setbacks.

Selling was seen across all the sectors. The BSE Realty Index crashed 9.7%. Metal, oil & gas, power, technology and capital goods stocks also cracked, respective indices fell 3-6%. Heavyweight Reliance Industries was one of the main culprit today, down over 5.8%.

The 30-share BSE Sensex closed at 15,404.94, down 491.34 points or 3.09%, after seeing a day's low of 15,330.56. The 50-share NSE Nifty plunged 147.80 points or 3.14%, to settle at 4563.90, after seeing an intraday low of 4538.50. Equity benchmarks tumbled 8.4% and 8.7% in six days, respectively.

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