Indices recover from early meltdown to close with marginal losses

What a dramatic day of trading! The frontline indices crashed almost 3 per cent each in mid-morning trades and then recovered most of the lost ground to close with marginal losses.

Indices opened the day on a flat note and saw some volatility in early trades. After slipping half-a-per cent, the indices recovered and traded flat for about half-an-hour. Reports of the government and SEBI planning to investigate the sharp rise in smaller stocks over the last one month led to some edginess in the markets.

The decline started after an hour of opening and caught most traders by surprise. Within 10 minutes, both the Sensex and Nifty had lost close to 3 per cent each in all-round selling in frontline stocks. Market breadth turned extremely negative and there were only a couple of index stocks holding on to gains.

The Sensex lost 239 points and the Nifty was down by 73 points to their day's lows within an hour of trade. The recovery came soon enough and lasted the rest of the session. If the drop was dramatic in its speed and depth, the recovery was no less so and surprised most traders.

The Sensex recovered all the early losses by late afternoon and went above 8500 levels once again, but failed to retest the day's highs posted in early morning trades. A bout of selling in closing minutes pulled the indices marginally into red.

The recovery was led by ITC, which went ex-bonus and today and started trading after a stock split. The stock opened firm and held ground through the market weakness and rallied strongly in afternoon trades. The stock had gained almost 10 per cent at one point, before closing the day with gains of close to 9 per cent.