BSE Sensex sheds 386 points, ends in red for weekend

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Dragged down by Sensex heavyweights Reliance Industries and ICICI Bank, the prime index closed at 17,349.07, with 27 components ending in the red. The key index touched the day's low of 17,294.73 and a high of 17,526.80 points.

India's largest private sector firm in terms of market capitalization, Reliance Industries, slipped 2.9 percent to Rs.2429.80, and ICICI Bank, India's leading private bank, lost 3.9 percent to end at Rs.1099.40. The two stocks account for more than a quarter of the main index.

Growing worries about the financial health of the global credit markets pulled down India's biggest bank State Bank of India (SBI), which dropped 3 percent to Rs.2114.70 and HDFC Bank, which shed 4.4 percent to Rs.1,474.95.

Some of the other stocks that ended in the red were Bajaj Auto (down 5.34 percent), Satyam Computer (down 4.52 percent) and Infosys Technologies (down 3.56 percent).

Reliance Power, which raised $3 billion IPO in January, fell 1.2 percent to Rs.416.85.

Other major losers were Tata Steel, Larsen & Toubro and Tata Consultancy Services (TCS).

Cipla (up 5.63 percent), Hindalco Industries (up 1.35 percent) and Maruti Suzuki (up 0.2 percent) were the only gainers of the day.

Taking into account Friday's fall, the Sensex has fallen 4.2 percent over the week, and is now more than 18 percent below a record high of 21,206.77 which it hit on Jan. 10.

Among the sectoral indices, BSE Bankex, BSE IT index and BSE Oil and Gas index suffered maximum losses.

The BSE Midcap and Smallcap indices ended 1.08 percent and 1.06 percent lower, respectively.

The market breadth of BSE was overall negative with 1,773 shares declining as against 930 shares advancing.

The broader 50-share S&P CNX Nifty of the National Stock Exchange (NSE) also fell, Friday, 1.56 percent to 5,110.75, to be down 3.6 percent on the week, after touching the day's low of 5,092.80 and a high of 5,184.00 points.

According to market analysts, rising inflation rate, which saw a six-month high of 4.35 percent for the week ended February 9, have dampened the sentiments of investors.

The analysts said that the Indian markets are waiting for overseas cues that do not seem to be positive, and so are unable to make a directional call.

"We seem to be completely dependent on what's happening elsewhere. India's growth story seems to be a thing of the past. Investors are behaving as if recession has come to India," said Arun Kejriwal, strategist at research firm KRIS.

"The way the market is falling just on overseas cues gives you a very eerie feeling going forward. One thing that comes out of all this is very clear: worse is yet to come," he added.

"Our market movement is right now dependent on prevalent global phenomenon and there has been net selling by foreign funds as well," said R.K. Gupta, chief executive at Taurus Mutual Fund.

"I expect the market to remain volatile for the next few weeks and will continue to show a negative trend," he said.

Brokerage firm India Infoline said investors should not build aggressive long positions ahead of next week's budget, as the market lacked clear direction due to volatile global markets.

The government releases its budget for the fiscal year beginning in April on Feb. 29.

"Even after the budget, worries of U.S. slowdown will continue to haunt the bulls," India Infoline said in a report.

Foreign funds have been net sellers of more than $3 billion so far this year, after buying a record $17.4 billion of Indian equities in 2007.

However, some investors are hopeful that markets will pick up in the next week in anticipation of a new budget that will focus on spending geared toward India's 2009 general elections.

Elsewhere in the region, Karachi's 100-Share index edged up 0.06 percent to a record close of 14,980.66. Colombo's All-Share index fell 0.25 percent to 2,510.79.

On Thursday, the US market ended weak as Dow Jones Industrial Average and the Nasdaq Composite Index dipped by 143 and 27 points respectively after announcement of a weak US mid-Atlantic manufacturing data, the lowest level since the 2001 recession.

As a result, the spillover effect was seen in Asian markets on Friday. Barring Taiwan, most of the other indices in the region ended with losses by an average of 0.2-3.5 percent.

While Japan's Nikkei ended down 1.37 percent, Hong Kong's Hang Seng fell by 1.35 percent.

Singapore's Straits Times was down 0.2 percent and China's Shanghai Composite plunged by 3.47 percent.