FII dependence fuels worry, market may dip further

Moneycontrol Bureau

The BSE Sensex on Thursday posted its biggest fall since July 2012. The market slipped 317 point to close below 19400, as the slide in European shares unnerved investors in India as well. Metal, banking, capital goods and realty shares bore the brunt of the sell-off.

FII flows which have crossed 2 percent of the market cap on a 12-month trailing basis are the biggest risk to the market. Again, today cues from the global front are not supportive and the market is likely to drag even lower. Experts also believe that most of the positives of the Budget are already priced in, so one can't expect any positive surprises as days nears Budget. All eyes will on the Sensex today whether it will fall below 19100 mark.

Asian markets were trading weak. Hong Kong's Hang Seng shed 0.67% or 152.75 points at 22,753.92.  Japan's Nikkei was down 0.89% or 101.18 points at 11,207.95. Singapore's Straits Times fell 0.22% or 7.26 points at 3,280.34.  South Korea's Seoul Composite slipped 0.19% or 3.87 points at 2,011.35. Taiwan's Taiwan Weighted was down 0.29% or 22.87 points at 7,934.59.

In the US, stocks pared their losses in the final hour of trading to close off their lows, with the S&P 500 clawing back above the widely-watched 1,500 level, stocks were sharply lower for most of the session, pressured by disappointing economic reports and amid continued worries the Federal Reserve might scale back its bond-buying program. The CBOE volatility index held above 15 trading at its highest level this year.

The European markets end sharply lower, with uncertainty over this weekend's Italian elections pushing a key euro zone equity index to its lowest level since the start of 2013.

In the currency space, the euro slumps further to a six-week low versus the dollar by uncertainty ahead of Italy's election at the weekend. The dollar index strong above 81 levels.

In commodities, Brent crude slips further to USD 113 levels pressured by weak global economic data.

From the precious metals space, gold recovers 1 percent as weaker US economic data boosted hopes that the Federal Reserve will maintain its monetary stimulus.

shadab.khan@network18online.com