GAAR relief short-lived, Sensex falls to 4-mth low

Mumbai: The BSE barometer Sensex on Tuesday plummeted by nearly 370 points to its almost four-month low of 16,546.18 points on brisk selling after RBI`s weak outlook on rate cuts, fresh weakness in the rupee amid FIIs concerns over more clarity on GAAR and fresh Eurozone worries.

The Sensex fell to a low of 16,502.91 in the morning before and continued in trade in negative zone for most of session and ended at 16,546.18, a steep fall of 366.53 points or 2.17 per cent. Sensex`s market value dropped by over Rs 53,000 crore on Tuesday. ITC, TCS, HDFC Bank, Tata Motors and L&T contributed to a loss of 205 points in the blue-chip index.

Brokers said one of the main reasons for today`s fall was RBI Deputy Governor Subir Gokarn`s comment in Hyderabad that there is little room for reduction in interest rates in view of inflationary pressures. Bank stocks in Sensex such as SBI, HDFC Bank and ICICI Bank fell between 2-3.3 per cent.

"Comments from RBI`s deputy governor Subir Gokarn that the central bank now has relatively little room to cut interest rates negated the sentiments," said Shanu Goel, Senior Research Analyst, Bonanza Portfolio. TCS led the Sensex fall shedding 5.77 per cent and was the biggest loser in the 30-share benchmark, followed by Bhel (-4.86 pc), ITC (-3.88 pc) and Tata Motors (-3.88 pc).

Analysts said though GAAR has been deferred by one year, FIIs would not be flocking to Indian markets just yet as they would still await for more clarity on provisions. Besides, they will move their operations from Mauritius to Singapore, etc, adding to their costs while disturbing operational smoothness, they added.

Selling pressure was mainly seen in Capital Goods, IT, Banking, TECK, Power, FMCG and Auto sectors as its indices declined sharply between 3.44 per cent and 2.40 per cent. The NSE 50-share Nifty also fell by 114.20 points or 2.23 per cent to finish below 5K-mark at 4,999.95.