The Russian stock market has dropped by nearly 9 percent in the last two days, as local banks scramble to raise fast cash and foreign investors keep a wary eye on the upcoming parliamentary elections, analysts and brokers said Wednesday.


The already sluggish market has nearly hit rock bottom, one dealer said.


"These are approaching auction prices," said Thomas Reed, an analyst with AIOC Capital.


The Moscow Times Index on Wednesday lost 7.08 points -- more than 5 percent -- to close at 130.90, while the dollar-adjusted index slipped to 64.21, which was 3.52 points lower than the day before. The ruble-adjusted index had lost a further 5.48 points Tuesday.


Experts blamed the drop on a number of factors, including Russian banks selling off equities to increase liquidity for end-of-quarter reporting.


"Banks are strapped," Reed said, adding that their quarterly obligation to hand over a portion of their reserves to the Central Bank left them with too few rubles. That -- combined with tax payments and a not fully recovered interbank lending market -- prompted banks to unload equities.


"They're basically selling as much as they can," Reed said.


Andrei Arofikin, an equities analyst at CS First Boston, said that in addition to paying their bills, Russian banks could be increasing liquidity in preparation for the government loans-for-shares deal, in which investors will bid to manage state shares in trust in some of the country's most valuable enterprises.


"It could be asset substitution," Arofikin said. "They could be selling stocks they're not interested in, for liquidity in the loans-for-shares scheme."


The government's announcement last week of the 29 companies to be auctioned as part of the deal nudged the stock market down as well, one analyst said.


"Nobody buys stocks for dividends, they buy stocks to control the factory," said Anton Lobanov, an equities researcher at Skate-Press Consulting Agency. "But now it becomes unrealistic to get some control of the company because lots of shares will be held by banks."


Analysts said December parliamentary elections are of some concern to foreign investors who are adopting a wait-and-see attitude, but in the future should not drastically affect the market.


"I would see some concerns over the results of parliamentary elections but that shouldn't affect the market excessively," Arofikin said.