SENSEX PLUNGES 478 POINTS

Street Slips on Spiralling Oil, Profit-booking

After an uninterrupted rise in stocks since January, investors needed an excuse to take home some profits. Higher oil prices offered them the perfect reason to dump stocks, resulting in benchmark indices posting their highest single-day fall in four months. 

Till last week, India was the best performer among global markets, and surprisingly even on Monday, when the market tanked, foreign portfolio managers were net buyers. 
Though Brent crude slipped below $125, snapping five days of gains, after touching 10-month highs, worries persist that tensions between Iran and Israel could lead to supply disruptions. 
"The rise in crude oil prices is the single reason for the fall in the markets today. It is difficult to know how long it will persist because these are geopolitical developments," said Nandan Chakraborty, MD-institutional equity research at Enam Securities. 
"That said, market has gone up a lot recently and it was waiting for a trigger to take a pause. The market was highly vulnerable to fall and would have fallen for any reason at all," he said. Market could Start Worrying 
On Monday, the Sensex dropped 477.82 points, or 2.67%, to close at 17,445.75 while the Nifty fell 148.10 points, or 2.73%, to end at 5,281.20. It was triggered by local institutions, which sold stocks worth Rs 700 crore. Though FIIs bought Rs 330 crore of equities, it was significantly lower than their recent purchases. 
Shares of Sesa Goa and Sterlite Industries led the declines in BSE's metal index after the Vedanta group spelt out the terms of the merger between the two companies over the weekend. The index fell 5.6% on Monday on account of profit booking after recent gains. India's benchmark indices have surged 17% between January 1 and February 25. 
The rally was driven by $5 billion worth of foreign portfolio inflows after the European Central Bank launched the first round of fund infusion. Indian stocks benefitted as they had underperformed US stocks in 2011. But, with the stock valuation advantage receding after the recent rally, analysts said the market could start worrying more about events that could interrupt the rally. 
"There may be multiple reasons — elections, budget, Food Security Bill etc. Some may think that inflation will take longer to soften. You can pick any one... There was no definite reason why the market surged since January, and there is no definite reason why the market should fall now... I don't think Iran will escalate the issue beyond a point," said Anand Tandon, CEO of JRG Securities.