Sensex down 221 pts,logs 20-month low

Sustained capital outflows,fears of global recession also weighed down the market.

Weekly market review: Despite the BSE Sensex recovering sharply on the last trading day yesterday,the benchmark index still closed down by over 221 points at 16,232.54,for the week on continued worries over euro-zone debt crisis amid downgrading of the country’s largest bank,SBI,by international rating agency Moody’s.

The BSE and NSE were closed on October 6,for “Dussehra”.

Sustained capital outflows,fears of global recession and weak second quarter earnings from key companies,to be announced from next week,also weighed down the market.

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Banking sector,which was under pressure on high interest rates due to rising inflation,got a severe beating after Moody’s Investor Service on Tuesday downgraded SBI’s standalone rating to D+ from C-.

Debt-laden Greece said,last Sunday,it would miss the deficit target set for it for this year and next by the International Monetary Fund (IMF) and European Union (EU),raising doubts over the success of a second bailout plan that sent global stocks reeling under heavy selling pressure.

As a result,the Bombay Stock Exchange 30-share Sensex commenced the week on a sluggish note and dropped further to a 20-month low of 15,745.43,a level not seen since February 8,2010,when it had logged a low of 15,651.99.

The market remained bearish on the first three days of the week,but bounced back on Friday by over 440 points after European banks moved to pump money into ailing economies,giving investors hope risks of a financial crisis was waning.

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The Sensex later ended the week at 16,232.54,posting a net loss of 221.22 points,or 1.34 per cent,from its last weekend’s level.