7% inflation shaves 489 points off Sensex

By Udayan Mukherjee, CNBC-TV18

It’s bad news from the market and on the inflation front. It looked like a lackluster sideways kind of trading session because that is what the rest of the world was doing today morning. When the 7% inflation number came out, all hell broke loose.

There was an immediate nosedive in the market and finally it closed almost at the lowest point of the day nearly 500-points down on the Sensex around the 15,300 mark again and the Nifty plummeted 120-points today and got back to close to 4,650.

So, it was a dismal day for trade and the breadth was bad. Just a couple of 100 stocks held out on the advances versus 900 declines. The midcap Index was down 2%.

This turned out to be another bad week for the market. Last Friday, at this point, hopes were raised. We had a nice little rally going into the weekend. We thought that some constructive phase has begun. It was not to be. The week began terribly with a big Monday sell-off of 800-points and the week-ended badly with a 500-point sell-off on the last trading day.

Over the week we have lost 6% on the Sensex and 6% on the Nifty. So, that’s a 1,000-points sell-off during the week for the Sensex. The Nifty Junior lost nearly 7%, the midcap Index is down 4% and the big carnage happened in two sectors-capital goods and banks.

BHEL has led the slide this week and was down 6% today. For the week, BHEL has lost 22% of its marketcap. L&T lost about 15%. SAIL is a very big loser this week. Today, all the banking stocks got hit really hard. The BSE Bank Index was down 3% in today’s session after a serious underperformance of the last many days, clearly on the back of inflation concerns and concerns on what the Reserve Bank might do to arrest it.

There were many other casualties today. But aside of banks and capital goods there were power stocks which did badly. Auto, as a sector, has started underperforming on interest rate hike fears.

Stocks that stood out are Ranbaxy and Hero Honda. But they were very few and far between. Midcaps have done badly and all the momentum stocks are down- IFCI, Ispat, Reliance Natural Resources Ltd (RNRL) and Nagarjuna Fertilizers.

Infrastructure stocks took a big hit whether it is Crompton Greaves, IVRCL Infrastructure, Voltas, Praj Industries or Lanco Infratech. All of them corrected perhaps in sync with BHEL and JP Associates. S Kumars and Reliance Capital had a bad day.

Stocks that did reasonably okay were Indiabulls Securities, Gammon Infrastructure and Orchid Chemicals.  There is buying on that company and all sorts of rumours. V-Guard Industries, Zee News and Gujarat NRE Coke were some other stocks that held out. But this is a day, which will be remembered as a down day on account of inflation woes.