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Wednesday, Sep 20, 2006

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Profit-booking brings Sensex down by 237 points intra-day

S. Muralidhar

With the indices rallying and inching close to their all-time highs, there has been a certain level of hesitancy that has been building up in the stock markets. Tuesday's mass profit-booking towards the end of the session was probably influenced by this relatively unsteady investment sentiment.

The trading session of the second day of the week started on a strong positive note and seemed to be no different than the ones of the last few weeks.

Opening at a higher level compared to their previous close, the benchmark indices seemed set for another day of bull dominance.

General Market Trend

Despite a minor dip into the red during the first hour of trade, the broad market trend during the rest of the afternoon on Tuesday was headed in the upward direction.

But even as stock market observers expected to witness the ascent of the indices to hit a level closer home to their all-time highs, a tidal wave of selling pressure slammed onto stocks across the board, dragging many of them into negative territory.

The sudden reversal of the trend took the market by surprise and must have compounded the tentative sentiment already prevalent amongst individual investors.

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The urge to sell may have also been caused by the relatively lacklustre performance of the other major Asian indices and the uneasiness surrounding the outcome of the next meeting of the US Federal Reserve.

The intra-day charts of the BSE Sensex and the NSE Nifty Index clearly show the dramatic canyon-style slide of the two indices.

The Sensex fell by about 237 points intra-day from a high of 12,153 points to a low of 11,915 points. Midway through the crash during the last hour and towards the very end of the session, a mild resurgence of buying support helped slowdown the slide.

Sector focus

At the close of Tuesday's session, the Sensex managed to claw back up a bit to close with a loss of about 100 points.

There were about five losers for every gainer amongst the 30 Sensex stocks; a reversal of trend compared to that of the first half of the session on Tuesday.

The quick, `selling pressure-led' slide in the market saw stocks from almost all the sectors being hammered down to lower levels. Stocks from the metals, energy, power, engineering, construction, auto, sugar, FMCG and food processing sectors were all splashed with red on Tuesday. However, select information technology and banking stocks were seen closing with marginal gains.

The selling spree also did not spare second- and third-rung stocks, which was reflected in the fall in the mid-cap and small-cap indices. Amongst the sectors that were the most hit on Tuesday's session were consumer durables, auto, capital goods, oil and gas, public sector undertakings and FMCG.

Stock-Specific Action

Amongst the only prominent gainers at the market on Tuesday were stocks from the entertainment, software and IT space. Satyam Computers, TCS, TV Eighteen, ENT Network and PVR were the stocks that were in the black.

From the Sensex, the only other stocks that were in positive territory were Dr Reddy's Laboratories, ICICI Bank and Reliance Communications.

Despite the falling price of crude, stocks from the oil and gas sector too had a rough day on Tuesday, with all the majors such as IOC, BPCL, HPCL, ONGC, Reliance, Essar Oil and GAIL testing lower levels towards the close of the session.

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