Sensex dives 347 pts on US debt woes; banks, cap goods tank

Moneycontrol Bureau

The 30-share BSE benchmark closed Monday with 347.50 points loss amid concerns over US debt ceiling. However, the good news is that September month ended with 760-point gains led by foreign liquidity, Raghuram Rajan's measures to revive economy and Fed's decision to continue bond buying programme.

The Sensex today closed at 19379.77, down 1.76 percent from previous close while the Nifty fell 97.90 points or 1.68 percent to 5735.30.

Globally, Nikkei and Hang Seng dropped 1.5-2 percent at close on fears of a possible shutdown of the US government at midnight, if the Republicans and the Democrats fail to reach a common ground on debt ceiling.

It may have some amount of impact on equity market, but one cannot be very sure about how exactly things would pan out tomorrow, says Deven Choksey of KR Choksey Securities.

Capital goods and banks stocks were butchered as both sectoral indices fell 3 percent each followed by Metal and Realty with 2 percent loss.

BHEL and Tata Steel were the major losers in the Sensex, falling 4.6 percent and 5.6 percent, respectively.

Steel and cement stocks were under pressure as railway freight rate will rise by 15 percent from October 1 owing to the commencement of busy season which typically exists from October-June.

Major bluechips ITC, ICICI Bank, Reliance Industries, HDFC Bank, HDFC, L&T and Tata Motors lost 2-4 percent whereas Hindustan Unilever, Infosys and Sun Pharma outperformed, gaining 0.3-1 percent.

Among others, Financial Technologies lost 6.4 percent after sources said Economic Offences Wing conducted its search operations in 184 places pursuant to National Spot Exchange (NSEL) issue.

ING Vysya Bank gained 5 percent on a media report that the ING group is looking to sell 43 percent stake and Kotak Mahindra Bank has emerged as the top suitor.

Reliance Power plunged 4.6 percent on news that the CEO, JP Chalasani has resigned and will be leaving the company towards the year end.

Jet Airways shares rallied 3 percent as government sources told CNBC-TV18 that the decks have been cleared for the Jet-Etihad deal.

Spicejet crashed 10 percent as the auditors have raised the red flag over the airline's ability to stay in the business. The auditors say accumulated operating losses have fully eroded the net worth of the airline.