The Hindu Business Line : Bears resume dominance; Capital goods, FMCG decline

Friday proved to be yet another day for the bears. A reversal in the spot energy markets and a weak sentiment in major Asian equity markets helped the bears resume their dominance.

Expectations that the Reserve Bank of Australia may hike cash rates in August appear to have dominated sentiment in the Asian markets.

Though the markets opened on a flat note selling pressure set in almost immediately pushing the BSE Sensex to the 10,200 mark. Another bout of selling pressure, which set in around noon pushed the Sensex to the day's low of 10,035.

While the broking community appears to have caused a large part of the selling pressure, insurance companies continued their buying spree.

The advances-declines ratio reflected the negative sentiment that dominated the markets.

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The capital goods, FMCG and consumer durables sectors topped the priority list of the bears. Each of these sector-oriented indices on the BSE shed about 3 per cent.

Frontline stocks in the metals, IT and oil & gas sector contributed a large part of the declines in the respective sector-oriented indices. The BSE Healthcare index managed to stave off the bear attack buoyed by gains in Cipla and Ranbaxy Laboratories.

Buzzing Stocks

Despite the market melt down, quite a few auto ancillary stocks attracted buying interest. Notable among them were Amar Raja Batteries, Exide Industries and Munjal Showa. Others that attracted interest included Sanghi Industries, Savita Chemicals, Balmer Lawrie and SREI Infrastructure.

Sector Focus

Dabur topped the losers' list in the FMCG sector. Cigarettes and liquor stocks bore the brunt of the bear attack with many stocks dropping significantly. VST Industries and GTC Industries shed 7 and 5 per cent respectively. Shaw Wallace, Champagne Indage and Herbertsons also shed significant value. Across the board declines were registered in the sugar space. Bajaj Hindusthan, which fell 8 per cent, was among the major losers in this space. Other prominent losers included Sakthi Sugars, Dhampur Sugar, DCM Shriram Industries and Rajshree Sugar. Plantation stocks also took a beating with Tata Coffee, Williamson Tea, McLeod Russell and Bombay Burmah shedding value.

Consumer Durables was subject to selling pressure. Many frontline stocks shed value on higher volumes, notable among them being BHEL and Bharat Earth Movers. Everest Kanto Cylinders, Grindwell Norton, GMM Pfaudler, Valecha Engineering and Bharat Bijlee were among the major losers in this space.

Timex Watches, Rajesh Exports were among the major losers in the durables sector. Losers also included home appliance manufacturers such as Hitachi Home, Bluestar and Whirlpool.

Event-Specific Action

ITC drew flak from the markets even as the company announced a 17 per cent growth in Q1 earnings. Market participants appeared to be unenthused by the earnings growth as the stock fell about 5 per cent on higher volumes.

Cipla was among the few blue-chip stocks that managed to stave off the negative sentiment. Accompanied by a two-fold rise in volumes, the stock clocked a 1 per cent gain, as the markets appear to be appeased by the company performance. Cipla reported a 53 per cent earnings growth for the first quarter.