Sensex tanks 281 pts on Cong-NCP tiff, Spain pain

Mumbai: With the political uncertainty involving the Congress and the NCP threatening to stall reforms, the sensex on Monday tanked 281 points — its biggest slide since mid-May — to its lowest close in over a month at 16,877. Fresh worries about Spain's debt crisis added to the worries on Dalal Street and also severely impacted the strength of the euro against the dollar. The rupee also fell against the greenback to close at 55.97, 64 paise weaker from its Friday close at 55.33. 

    The session started on a weak note with the sensex opening over 100 points lower. It fell through the session to close 1.6% lower, with 28 of its 30 constituents ending the day in the red. For the first time in nearly four weeks, the index closed below the 17,000 mark and left investors poorer by nearly Rs1 lakh crore with the BSE's market capitalization now at Rs60.2 lakh crore.
    Among the sensex shares, Maruti led the slide with a 5.7% drop to Rs1,080 after the company declared a lockout at its Manesar plant over the weekend because of the labour unrest, which has already claimed one life. The other top losers were Sterlite, down 5.2% at Rs100, and Hindalco, down 4.7% at Rs116. 
    Monday's slide was triggered by concerns that the standoff between the Sharad Pawar-led NCP and the Congress over affairs of the ruling UPA may force the government to dump some of the reforms planned to boost the economy, market players said. 
    Continuing dry spell across the country added to the worries on Dalal Street. Market players said a poor monsoon will push up food prices and lead to a higher rate of inflation, something that would stop the RBI from cutting interest rates in its July 31 policy review. 
    Weakness in the global markets, stemming mainly from the increasing costs for Spanish bonds, also rattled domestic investors, institutional dealers said. At the close of session on Monday, although the Spain's main index, Ibex, had recovered nearly 6% from its midsession lows to settle 1.1% lower, Germany closed nearly 3% lower while FTSE in London was off 2%. In the stock market, other than the index stocks, RCOM slid 3% to close at Rs62 after the debt-ridden company announced that it was postponing the Singapore IPO of its undersea cable arm. The stock is now close to its all-time low Rs60.