Indian markets have seen some recovery after European stocks opened flat today. At 1425 hours, the Sensex was down 365 points to 15,700, recovering over 200 points from the day's low of 15,478. The Nifty traded with 106 points cut and was trading above the 4,700 mark.
Earlier, markets had fallen to near two year lows. The Sensex was down nearly 600 points while the Nifty had given up over 160 points. The Sensex and Nifty were among the worst performers among all Asian indices, falling nearly 3 per cent.
Analysts attributed the panic selloff to liquidation by foreign funds. Fears of global slowdown also led to selling pressure across global equities. Asian markets closed sharply lower with markets in Taiwan and South Korea falling more that Indian equities.
"The underlying retail investors in the western world are pulling out money from the risk assets, whether in the emerging markets or developed markets... FII fund managers have to find cash for which they have to sell," Saurav Mukherjea of Ambit Capital said.
"The currency factor is clearly not helping. It has really hurt investor returns. What is causing the sellout is that they (FIIs) don't see any reason for the rupee to pullback to 45," he added. The rupee has fallen nearly 14 per cent in the last quarter alone. However, the currency was trading higher today, possibly on the back of intervention by the central bank.
Consumer durables were the only group of stocks trading higher on the Bombay Stock Exchange. These stocks had seen a sharp selloff yesterday. Banking, energy and IT stocks were the worst hit, falling over 2 per cent. Realty stock saw relative outperformance, falling 1 per cent lower.
On the Sensex, only NTPC was trading with marginal gains. Bharti (down 5 per cent) was the worst performer among the 29 other stocks that were trading lower. On the Nifty, two of the 50 stocks were trading higher. Reliance Communications gained 1.5 per cent after the Supreme Court granted bail to three executives of ADAG group in the 2G case.
The market breadth had improved marginally but an overwhelming 87 per cent stocks were still trading lower on the broader BSE 500 index.