Sensex dips 239 pts on poll, rate fears

Mumbai: Led by foreign fund selling, due to growing uncertainties about the government's ability to complete its full 5-year term at the centre and investors' fear that the rate of interest in the economy may not fall as was expected after the RBI cut key policy rates on March 19, the sensex fell 239 points to 18,802 on Wednesday. As FIIs net sold stocks worth Rs 368 crore, investors were poorer by Rs 70,000 crore with BSE's market capitalization now at Rs 68.1 lakh crore. 

    During late session there were talks that the Lok Sabha elections, currently scheduled for May 2014, may be advanced this year which shook investor confidence and there was heavy selling, dealers said. As a result, with just 75 minutes the sensex lost about 270 points but recovered some ground in the closing minutes to end 1.3% lower. Fresh fears about the debt crisis in Europe also had an impact on market sentiment, dealers said. 
    During the day, HSBC said that its Services PMI for India for March fell sharply to a 17-month low, at 51.4 from 54.2 a month ago, because of a slower growth in order book. Since a reading below 50 indicates contraction in the sector, market players were unnerved by the sharp deterioration in the business environment in the services sector, dealers said. 
    Among the sectors, those which are sensitive to the rate of interest, like real estate, capital goods and auto, declined the most while healthcare and power stocks cushioned the fall, but only in a limited way. Among the 30 sensex stocks, 26 closed in the red. 
    Bharti Airtel led the pack of sensex laggards, down 4% at Rs 281 while Bajaj Auto closed 3.7% off at Rs 1,692 and Tata Motors ended 3.5% lower at Rs 258.