Markets butchered; Sensex nosedives 454 points

Equity benchmarks saw a big carnage on Thursday on the back of panic selling by traders, citing reasons like political instability and series of scams. Foreign institutional investors also participated in this sell-off, which hammered the Sensex to shed more than 500 points during the day. The 50-share NSE Nifty closed below 5800, which even tested 5750 level in an intraday trade.

Trigger in margin calls could also be the reason, says Nipun Mehta of SG Private Banking India. Jigar Shah of Kim Eng Securities and Nipun Mehta both said markets got sold off because of political instability and several scams happening in India. Bribes for loans scam unearthed in previous month, which was involved top level executives of banks; another one was 2G spectrum allocation scam, which was worth Rs 1.76 lakh crore.

Bears were completely charged up in second half of trade; midcaps and smallcaps got slaughtered very hard - more than benchmarks. Several stocks locked at lower circuits, which pushed the BSE Midcap and Smallcap indices down by 4.5% & 6%, respectively. There were rumours that select midcap and smallcap companies involved in insider trading.

Amisha Vora of Prabhudas Lilladher said this was very disturbing cut against the fact that European markets were also stable. She said sell-off by FIIs could be one of the signs of trend.

"B group collapse or select midcap collapse can be attributed to some of these things. We have been hearing about actions against people whereby no new funding is available to those midcap stocks or B group stocks. But B frontline is falling; it is definitely selling which is emerging and mutual funds always have been small sellers in the markets. It has to be FII selling,'' she explained. FIIs were net sellers of around Rs 1,900 crore in previous two sessions.

The 30-share BSE Sensex closed at 19,242.36, down 454.12 points or 2.31% from previous closing value. The Nifty crashed 137.20 points or 2.32% to settle at 5,766.50, after hitting an intraday low of 5,742.30. Breadth was pathetic today; about 20 shares declined as against every one share advanced on National Stock Exchange.