Financial Daily from THE HINDU group of publications
Thursday, Apr 13, 2006
Financial Daily from THE HINDU group of publications Thursday, Apr 13, 2006 |
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Markets
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Commentary Columns - Sensor S.Muralidhar
Trading highlights Biggest one-day fall for Sensex in two years. Auto and IT big losers. Small-cap and mid-cap stocks too feel the heat.
Wednesday's slide in the stock market, one of the biggest falls in a single session in the last couple of years, could have left many investors wondering if the much-talked-about correction in the markets has finally set in.
General trend
Monday's trading session, the first of only three trading days this week, was relatively volatile, but turned out to be a positive session towards the end and the benchmark indices posted gains. But, Wednesday's session seems to have been a reversal of that trend. Starting out on only a marginally weak note, the indices seemed set to break out into another round of gains after they breached the previous session's close within the first two hours of trading. But, almost immediately after that stage, the major indices went into a tailspin, driven down by a wave of selling pressure.
Bearish tone
Lack of institutional support, profit booking at the higher levels and the general nervous sentiment in the run up to the announcement of annual results by the major information technology companies later this month seemed to be the biggest factors in the sudden setting in of bearishness in the market on Wednesday. The bear hug covered stocks from almost all the sectors in the market and though there were a few counters that witnessed a mild reversal of the negative trend later during the session, most stocks just simply could not regain lost ground. As a result, the BSE Sensex closed sharply down at 11,356 points, a fall of 2.63 per cent or about 307 points. This is the single largest fall in one trading session since May 2004 when the poor sentiment in the market after the current Congress-led Government's coming into power led the indices down. On Wednesday, at the NSE, the Nifty index was also down 2.83 per cent at 3,380 points.
Sector focus
The sectors that came under sharp focus on Wednesday, on the negative side in keeping with the market trend, were IT, auto, engineering and cement. Of course, the other sectors too were not spared, but counters in these four sectors had a particularly bad day. While lack of institutional support at lower levels and the general over-bought situation in the market is supposed to have been the reason for the sell-off, the larger issue that could have also been nagging investors is the announcement of results by the major IT companies. Industry benchmark Infosys Technologies is expected to announce its numbers for 2005-06 later this week and the nervousness has set in about whether the results have been factored into the stock price.
Buzzing stocks
There was a big bunch of losers during Wednesday's session and IT companies such as Infosys, TCS, Wipro, Satyam Computers and Mphasis BFL were leading the pack of stocks in the red. Also in their company were auto stocks such as Tata Motors, Maruti Udyog and Mahindra & Mahindra. But, among the ruins were also a select few stocks that posted some gains including Sterlite Optical, Sterlite Industries and BPCL, the sole gainer from the Nifty-fifty.
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