Bear hug costs Sensex 1392 pts in 8 days; Hero Honda up 6%
The mood on Dalal Street has not improved yet after the key rates hike and hawkish tone set by the RBI governor Duvvuri Subbarao. The Sensex shed nearly 259 points on Thursday, with continuing downtrend for eighth consecutive session.
The mood on Dalal Street has not improved yet after the key rates hike and hawkish tone set by the RBI governor Duvvuri Subbarao in a policy meeting on May 3. The Sensex shed nearly 259 points on Thursday, with continuing downtrend for eighth consecutive session.
Experts see earnings downgrade in the quarter ended June 2011 after the 50 basis points hike in repo and reverse repo rate. Interest cost of the companies will increase going ahead as banks have slowly been increasing their lending rates. Deven Choksey of KR Choksey Shares & Securities feels that people basically want to sit on cash for a simple reason that there is a kind of possibility of earning downgrade happening going forward once this particular oil price hike is announced. Inflation is a major cause of concern, says Finance Minister Pranab Mukherjee. "Food and oil prices are major inflation factors," he said. Food articles inflation for the week ended April 23 was at 8.53% as against 8.76% in previous week. Fuel group inflation was unchanged at 13.53% during same period. RBI governor has made the move to contain inflation without hurting country's growth.Robert Prior-Wandesforde, Credit Suisse says that the Indian economy and markets are facing a particularly unpleasant combination of macroeconomic circumstances right now. "This includes high inflation, rising interest rates and the likelihood of downside growth surprises. This situation may continue for some months making us pessimistic about the equity market outlook," he said.The 30-share BSE Sensex dropped 258.78 points or 1.40%, to close at 18,210.58 and the 50-share NSE Nifty closed below the 5500 mark for first time since March 23, down 77.30 points or 1.40% to 5,459.85, dragged down by 42 shares out of 50.Choksey feels that the Nifty could possibly stay in range of 5400-5700 because the option traders are basically taking a strong long bet on the 5400 level. Amit Dalal, Executive Director, Tata Investment Corporation said there would be some more pressure mainly because people have to still adjust their portfolios worldwide. "So there maybe some largecaps where there maybe selling based on global perspective," he said.Realty, power, FMCG, healthcare, banking, metal, technology and capital goods stocks saw selling pressure today, with respective indices falling 1-3%.Bharti Airtel plunged more than 3% after less than expected bottomline reported in fourth quarter on dip in margins. India's largest telecom operator reported net profit of Rs 1,401 crore on consolidated basis as against street expectations of Rs 1,740 crore. Largecaps like TCS, NTPC, ITC, ICICI Bank, Sterlite, HDFC Bank, HUL and BHEL were down 1-3%. Tata Power, Reliance Power, PNB and Reliance Communications plunged 5-6%.Ranbaxy Labs was the biggest loser on Nifty, with falling 6%. US Federal prosecutors are negotiating a settlement with Ranbaxy that could result in fines and payments exceeding USD 1 billion, as mentioned in the Fortune Magazine, for fraudulent conduct alleged by the FDA, reports CNBC-TV18 quoting sources.ACC and Ambuja Cements tumbled about another 4% after Holcim increased stake above 50% in both companies. However, Hero Honda showed outstanding performance today, with rising 6% on short covering. Analysts feel that company's fourth quarter EBITDA performance was better than street expectations. The broader indices too were down around 1%. Midcap stocks like HDIL, Shriram City, Redington, Hathway Cable and Marico lost 5-8%. However, Jyothy Labs, Apollo Hospital, United Phosphorous, Tulip Telecom and Religare Enterprises gained 3.5-7%. Rs 474.75 3.51% About 899 shares advanced as against 1955 shares declined on Bombay Stock Exchange._PAGEBREAK_Realty, power, banks, telecom drag Nifty below 5500Equity benchmarks slipped quite sharply in the afternoon trade after a rangebound trade. The 50-share NSE Nifty dropped below the 5500 level for first time since March 24, dragged down by 47 shares out of 50.Prabhat Awasthi of Nomura says that elevated inflation and interest rates, slowing growth momentum, risk to investment cycle and downside risk to corporate earnings growth amid rising overall input costs have underpinned cautious stance on the market since end of last year. He remains underweight on rate cyclicals, especially banks.Realty, power, FMCG, banking, healthcare, cement, technology, telecom, and Anil Dhirubhai Ambani Group companies' shares were taking huge beating - respective indices fell 1-2%. However, Hero Honda showed complete outperformance as compared to other largecaps, with rising 5.5%. Analysts feel that company's fourth quarter EBITDA performance was better than street expectations. Even Reliance Industries and GAIL were other gainers.The 30-share BSE Sensex was trading at 18,224, down 245 points and the 50-share NSE Nifty tumbled 81 points to 5,456. But technical analyst, Rakesh Gandhi of LKP feels that Nifty has strong support at 5400 and Sensex at 18000.Heavyweights like TCS, ICICI Bank, Bharti Airtel, ITC, NTPC, HDFC Bank, Wipro and HUL were down 2-3%. Infosys and SBI fell close to 1%.Ranbaxy Labs, Ambuja Cements and Reliance Infrastructure, Tata Power and ACC were the top losers, with falling 4-5%.Midcap stocks like Jyothy Labs, Tulip Telecom, KGN Industries, United Phosphorous and Kwality Dairy rallied 3-7% while Marico, HDIL, Shree Global, Deccan Chronicle and Den Networks lost 4.5-6%.Smallcap stocks like Piramal Life, Kanani Industries, Kama Holdings, Acropetal Tech and Parrys Sugar surged 5-9%. However, Hinduja Venture, Talwalkars Fitness, Gati, Allied Digital and Prabhav Industries fell 5-7%.About 375 shares advanced as against 889 shares declined on National Stock Exchange.Sensex trades flat; realty, power, banks downIndian benchmark indices were trading flat in the afternoon session. Some buying was seen in consumer durables and oil & gas stocks while realty, power and banking stocks were trading lower.Deven Choksey, MD, KR Choksey feels that the market will be in the range of 5400-5700 and there are lots of possibilities of market going down if the earning growth is not sustaining. At 12.56 hrs IST, the Sensex was up 26.21 points or 0.14% at 18495.57, and the Nifty was down 5.75 points or 0.10% at 5531.40. The markets breadth was positive; about 1418 shares advanced to 1135 shares on the declining side, while 1080 shares remained unchanged.Top gainers on the Sensex were Hero Honda at Rs 1,700.05 up 6.25%, Jindal Steel at Rs 628.65 up 1.43%, ONGC at Rs 313.60 up 1.37%, Reliance at Rs 959.80 up 1.35% and Hindalco at Rs 207.85 up 1.09%.Top losers on the Sensex were Tata Power at Rs 1,259.45 down 2.85%, Reliance Infra at Rs 631.45 down 1.93%, Reliance Comm at Rs 92.85 down 1.49%, HDFC Bank at Rs 2,229.20 down 1.39% and DLF at Rs 216.45 down 1.32%.Most active shares on NSE were Infosys, Reliance, Bharti Airtel, SBI and ICICI Bank.Top gainers on the BSE Midcap - Tulip Telecom at Rs 160.80 was up 7.31%, Jyothy Labs at Rs 221 was up 6.48%, United Phos at Rs 156.75 was up 5.63%, Pfizer at Rs 1,312 was up 5.23% and Alstom Projects at Rs 602.55 was up 4.80%.Top losers on the BSE Midcap - Marico, Shree Global Tr, HDIL, Shriram City and Anant Raj Ind were down 3-5%.Directionless trade continues; SBI, Reliance most activeEquity benchmarks were directionless in trade today at 12:15 hours; they could be waiting for some trigger to more either side. Indices paused the sell-off seen in previous seven sessions. More than expected rate hike in key rates by RBI on Tuesday had dampened the mood on Dalal Street - investors look cautious post the event.On one side, power, telecom, FMCG, cement, technology, Anil Dhirubhai Ambani Group and select financials were taking beating. However, oil & gas, auto and capital goods were supporting the markets.Deven Choksey, MD, KR Choksey Shares and Securities also feels that the market will be in the range of 5400-5700 and there are lots of possibilities of market going down if the earning growth is not sustaining. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
