The last big wave of selling is on the cards

The market witnessed a steep plunge, closing at a three-month low on the back of negative global cues. The Sensex plunged 509.40 points in intraday trade to go below the 16,000 level. It shut at 16,022.48, down 447.02 points (2.71%). The Nifty tanked 137.20 points (2.78%), to close at 4,806.75.

All Asian equity markets finished in negative terrain on Tuesday as worries over the European debt crisis erupted when the Bank of Spain stepped in to rescue CajaSur, a savings bank (which has $16.36 billion of outstanding loans), after the bank failed to finalise a merger. The seizure of CajaSur brings up further concerns over Spain’s creditworthiness.

The Shanghai Composite declined 50.79 points or 1.90% to 2,622.63; the Hang Seng dropped 682.26 points or 3.47% to 18,985.50; the Jakarta Composite fell 95.49 points or 3.66% to 2,514.12 and the KLSE Composite slipped 23.56 points or 1.85% to 1,250.13.

Similarly, the Nikkei 225 tumbled 298.51 points or 3.06% to 9,459.89; the Straits Times shed 72.68 points or 2.67% to 2,651.19; the Seoul Composite dipped 44.10 points or 2.75% to 1,560.83 and the Taiwan Weighted was down 236.36 points or 3.23% to 7,086.37.

US markets once again closed in the red overnight, led by a late sell-off. The major indices made a positive start, but as the day proceeded, worries over the European debt crisis and uncertainty about the US government’s financial overhaul plan made investors cautious and led the indices into the red. The Dow lost 126.82 points (1.24%), to 10,066.57. The S&P 500 fell 14.04 points (1.29%), to 1,073.65, and the Nasdaq closed lower by 15.49 points (0.69%), to 2,213.55.

Back home, petroleum minister Murli Deora hinted on Monday that prices of auto and cooking fuels might be hiked following an inter-ministerial meeting on 7th June amidst surging under-recoveries of the three public sector oil marketing companies—Indian Oil, HPCL and BPCL.

Cipla was the only one stock in the Sensex which managed to settle in the green while Sun Pharma and Siemens were the only stocks to end higher on the Nifty.

The major losers on the Sensex were Reliance Communications (RCom) down 6.32%, Hindalco Industries was down 5.43%, Tata Motors was down 4.66%, Sterlite Industries was down 4.49% and Tata Steel was down 4.45%.

The top losers on the Nifty were SAIL (down 6.09%), RCom (down 5.81%), Hindalco (down 5.63%), Jindal Steel (down 5.59%) and Ambuja Cements was down 5.58%.

All sectors on the BSE sectoral space ended in the red. The main losers were metal (down 5.10%), consumer durables (down 4.45%), capital goods (down 3.09%) and oil & gas (down 2.58%).

The wireless broadband access (BWA) spectrum auction kick-started on Monday. On the first day itself, the price for a pan-India spectrum rose by as much as 34.5% above the base price of Rs1,750 crore, to close at Rs2,354.53 crore.

A total of five clock rounds were completed on Monday with the government revenue touching Rs4,706.36 crore at the end of the day. If the payment from the publicly owned BSNL and MTNL is also included, the government revenue will surge further to Rs6,940 crore.

At the time of writing, the Dow was trading 210.40 points down at 9,856 and European markets were all down 2%-4%.