Sensex slips below 16,000 on worsening global markets

Indian equities are headed for another big fall Monday as the 30-stock Sensex dived nearly 2 per cent to slip below 16,000 levels. At 1107 hours, the Bombay Stock Exchange benchmark was down 281.84 points to 15,880 and the Nifty declined 84.35 points to 4,783.

The Nifty is now trading below the crucial support of 4,800 levels indicating further downside in the markets. Salil Sharma, Partner at Kapur Sharma & Co had earlier said that 4,810 is a key support, because it was the 200 weekly moving average, below which the Nifty can plunge to 4,200 levels.

Outlining the reasons for the weakness, Dr Adrian Foster of Rabo Bank said this is a continuation of the trend that was seen after Wednesday last week. "Investors have started to catch up on the idea that our policymakers don't have too many options," he said.

All sectoral indices were down led by metal stocks that plunged over 3.5 per cent over the possibility of another recession. Banking, oil and gas and realty stocks were trading with over 2 per cent losses. The consumer durables index on the BSE tanked over 4.5 per cent.

All but two stocks - Tata Power and Wipro- on the Sensex were down. Sterlite was the top loser, falling over 5 per cent. Hindalco and Coal India were down 5 per cent too.

The market breadth was extremely weak with only 7 per cent stocks rising on the BSE 500 index.

With key levels broken and volatility at an all-time high, analysts said any speculation on the downside will be futile.

Samir Arora, Fund Manager at Helios Capital said, "The whole week has been scary, currency has been scary but right now it does not seem that will end... I have been bearish for some time now...only on the basis that in 2008 we reacted differently and maybe we could justify by saying we never saw something like this before and our markets will not be affected. It will be a career recur for any fund manager today to again reclaim that my market is ok therefore because of the recent negative experience in 2008, everybody is going to pull the trigger first and we have done that."

Independent Market Analyst Saumil Trivedi said it is difficult to tell what kind of lower levels the markets can hit. "I am not sure if 4,200 will hold," he added.

Deven Choksey of KR Choksey said most funds operating in the markets are trading funds and not investment funds. These funds have overlooked the strong growth in emerging markets -China and India- and are putting money in US treasury, he added.

Asian markets extended losses. Japan's benchmark Nikkei was down over 2 per cent. Hong Kong's index Hang Seng was also down 2.5 per cent. South Korea's Kospi was also trading 2.6 per cent lower.

Meanwhile, the Dow Futures indicated another weak opening for the Wall Street. At 11.20 hours, it was trading with a 85 point discount (0.8 per cent) at 10,625.