Financial Daily from THE HINDU group of publications
Saturday, Apr 09, 2005
Markets - Commentary
Columns - Sensor
Tech stocks crumble under selling pressure
THE bears continued their march as the markets declined on Friday as selling pressure continued to dominate the trend. The BSE Sensitive Index fell for the fourth day in the last five trading days to close at 6479.54, down by 66.10 points; the S&P CNX Nifty was down by 21.65 points at 2031.20. Growing concerns of higher interest rates (as bond yields have approached the seven-per cent mark) and inflation fuelled by higher crude prices, and attendant cost pressures that could impact earnings growth kept the markets on a bearish mode.
That the decline was fairly widespread, especially in large-cap stocks, was evident from the patterns in the Nifty stocks with. 40 of its 50 constituents shedding value. The gainers in the Nifty were Bajaj Auto, ITC, Hindustan Petroleum, Shipping Corporation of India and Colgate.
On the BSE, too, the number of shares that declined outnumbered those that rose. Advancing stocks were 959 compared to 1,364 declining stocks and 72 remained unchanged.
The BSE Sensex opened on a flat note marginally lower than the previous day's close of 6545.64. But, subsequently, it plunged into the red with the frontline information technology stocks bearing the brunt of the selling pressure. Tech stocks put up a poor show with investors overly cautious ahead of the earnings season with the bellwether stock Infosys due to reveal its quarterly numbers and guidance for financial year 2006 on April 14.
The downward trend was widespread as several sector-specific and broad-based indices shed value. While the CNX IT index fell by 2.21 per cent, S&P CNX 500 and the CNX Midcap 200 lost 0.84 per cent and 0.62 per cent, respectively. The BSETeck Index fell by 31.72 points or 1.83 per cent while the BSE PSU Index reported a loss of 13.65 points
Led by index heavyweights Infosys Technologies, Reliance Industries, Satyam Computers and Wipro, the bellwether indices recorded steep losses. The stock of ONGC, which dominates index trends, opened at Rs 900, reached a low of Rs 880 and settled at Rs 886.05 at the close.
There were several mid-cap and small-cap stocks such as Jindal Photo, Fertilizers and Chemicals Travancore, Aztec Software, HMT, Vesuvius India and NRC.
Company-specific action: The stock of NRC, which manufactures tyre cord fabric and chemicals, rose by 8.4 per cent after it announced the acquisition of a tyre yarn plant and an expansion of its existing tyre cord fabric capacity.
Alstom had yet another good outing and the price hit the upper circuit of 20 per cent. This followed the announcement of the open offer by Areva to acquire up to 7,977,495 equity shares of Rs 10 each in the company on Thursday.
The National Thermal Power Corporation was up by 90 paise on the back of its announcement that its provisional annual profits rose by just 0.6 per cent to Rs 5,292 crore from Rs 5,261 crore a year earlier.
Stocks from the metals sector, too, ruled weak. SAIL, TISCO, Essar Steel and Hindalco recorded sharp losses. Automobile majors Hero Honda, Tata Motors and Mahindra & Mahindra also suffered losses on concerns about the impact of rising oil prices.
Among the pharma stocks, the major losers were Cipla, Dr. Reddy's Lab, Ranbaxy and Glaxo.
Media stock Zee Telefilms slipped as much as 3.2 per cent to Rs 143.75 despite recording a high of Rs 151.6 in early trading. Construction major Larsen & Toubro eased 2.15 per cent. Power utility players Tata Power and Reliance Energy lost 1.7 per cent and 0.9 per cent, respectively.
Sentiment was also lacklustre for banking sector stocks.
The other major gainers on the Nifty were Bajaj Auto, Hindustan Petroleum, ITC, Shipping Corporation of India and Colgate.
Prominent among the losers were VSNL, HCL Technologies, HDFC Bank, Kothari Sugars, Bajaj Hindustan, Reliance Industrial Infrastructure and Vishal Exports.
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