Chidu's 'involvement' in 2G scam dents investor confidence

There was complete mayhem in the markets today over the government’s inaction over key policy issues. The Sensex closed down 388 points or 2.3 percent at 16,488and the Nifty ended down 119 points at 4,943.

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Even though Europe was farely steady, the panic sell off in the Indian markets was primarily triggered by the opposition party’s demand for the resignation of P Chidambaram. According to Fistpost Investing Editor, Shishir Asthana, investor confidence was dented and the market breadth remained negative because Chidambaram’s involvement in the scam raises questions over the government’s stability and the depth of the 2G scam.

Moreover a report said that industrial production contracted to 7 percent in October. A lowering of the Sensex target by broking firm CLSA and disappointing Asian economic reports added fuel to the fire, while the market ignored positive news on the inflation front, when food inflation dropped below 7 percent.

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While capital goods were the biggest losers today, the metal, power and banking indices were all under pressure and fell around 3 percent each.

The market is still hoping for a year-end rally. A technical bounce back is possible by next week.

For more on the market’s performance, listen to our market wrap below: