Sensex,Nifty at 18-month lows

The Nifty of the National Stock Exchange also closed below the 4,800 level.

Extending losses for the fifth straight week,the BSE benchmark index Sensex closed below the 16,000 mark at an 18-month low,losing nearly 2 per cent during the week due to heavy capital outflows prompted by negative external and internal factors.

The Nifty of the National Stock Exchange also closed below the 4,800 level at one-and-a-half years low.

Selling was seen across-the-board as 12 out of 13 BSE sectoral indices closed in the red,with metal,PSU as well as interest rate-related banking,realty and auto segments suffering the most.

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The market showed a firm trend for initial two days of the week following a smart rise in world stocks along with surge in top heavyweight RIL,and some of the IT stocks,leading the the Bombay Stock Exchange 30-share barometer to register an intra-week high of 16,549.21 on Tuesday.

Downgrading of Japan’s sovereign debt rating by Moody’s later weighed on the market and it started falling since Wednesday and remained sluggish during rest of the week.

Moody’s Investors Service on Wednesday downgraded Japan’s sovereign debt rating by one notch to AA3 from AA2 with a stable outlook,provoking investors to book profits.

Operators preferred to book profits and play safe ahead of the speech of US Federal Reserve Chairman late on August 26,expecting another round of quantitative easing to tackle the current fluid economic situation globally.

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The Sensex later plunged to settle the week at 1-1/2-year low of 15,848.83,a fall of 292.84 points. Or 1.81 per cent. It had closed at 15,790.93 on February 5,2010.

The broadbased NSE 50-issue Nifty dipped 97.85 points,or 2.02 per cent,to end at 4,747.80.

In straight five-week of losing string,the Sensex has slumped by 2,873.47 points,or 15.35 per cent,and the Nifty lost 886.15 points,or 15.73 per cent.

Increased selling by Foreign Institutional Investors (FIIs),the main market movers,was the main reason behind the current slide. FIIs withdrew Rs 3,315.85 crore in the week,including provisional data of August 26,taking a total to over Rs 11,400 crore in the current month so far.

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Rise in the food inflation to near double digit to 9.80 per cent for the week ended August 13,from 9.03 per cent in the preceding week,too dampened the sentiment,fuelling expectation of another rise in key interest rates by the RBI which might affect the corporate earnings growth further.

The sentiment was also affected after the apex bank on August 25 warned of difficult days ahead,saying inflation will remain at elevated levels for some more time while the economic growth rate will moderate in the current fiscal.

Investors also seemed to be cautious over the domestic political shakiness that continued for the Government over the anti-corruption activist Anna Hazare’s fast for a strong Lokpal Bill.

Meanwhile,US Fed late on Friday left the door open for future stimulus but did not offer new measures to boost the world’s largest economy,saying it was critical to reduce long-term joblessness.