Sensex hits 5-mth low, ends 306 points lower; Realty dips 4%

An unstoppable sell-off for 5th consecutive session dragged the Indian equity benchmarks to five-month lows despite positive global cues. The 30-share BSE Sensex slipped below the 18,000 level in an intraday trade - a psychologically important level - for the first time since August 31, 2010, pulled down by selling across sectors. However, the Nifty managed to hold strong 5400-mark, which seems like a major support for the time being.

Pathik Gandotra, Senior MD & HOR at IDFC SSKI Securities sees more pain going ahead. "I still think there will be some more negative news that we will have to face, with specific regards to interest rates and further liquidity tightening. So we are still not calling it a bottom," he said.

According to him, the right value would be about 17,000 odd on Sensex which would be roughly 12-13 times forward earnings.

Ambareesh Baliga of Karvy Stock Broking feels that the markets will touch 5200 level, but "will not go directly" there. He predicts a pre-budget rally but warns that it could start from a level as low as 5200. He said the major contributors to the fall would be auto and banks. "Banks possibly can fall 8-10% more from here, autos we see another 15-18% sort of a fall from here."

Foreign investors could be pulling the money out for investment in other asset classes, which resulting panic selling by traders today. Deven Choksey of KR Choksey Securities said the selling could be happening through the DMA (daily moving average) route. "Obviously people are withdrawing money for want of having money passed into the dollar assets. However, I don't see fundamentally many things are wrong in the market neither inflation can be having so much of overhang."

Foreign institutional investors were net sellers of nearly Rs 6,000 crore in the month of January as against buying of more than Rs 2.25 lakh crore by them in previous two years.