The Hindu Business Line : Profit-booking batters key sectors

AFTER rising slowly, but steadily, during the last four weeks and gaining over 6.5 per cent during this period, the stock market witnessed a strong reversal on Monday. The major indices were splashed in the red after sustained profit booking in the key index stocks sent them spiralling down.

Almost all the major index constituents were battered by profit-booking as institutional investors dumped stocks in the key sectors such as information technology, banking, pharmaceuticals and auto. The session had actually started on a strong note with both the Bombay Stock Exchange's Sensitive Index (Sensex) and the National Stock Exchange's fifty share Nifty posting gains during the first 90 minutes of trading. Subsequently, profit booking set in and the indices slipped into negative territory.

The slide into the red was irreversible during the day's session and both the key indices closed on Monday with losses of over one per cent. At the BSE, the Sensex opened 14 points higher at 5,875 points. After touching an intra-day high of 5,895 points, a wave of profit-booking pushed the Sensex down to an intra-day low of 5,782 points during the last hour of trade. Only a marginal rise in buying support towards the close ensured that the Sensex could end the day at the threshold 5,800 points.

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Monday's weakness at the stock market is being attributed to the nearing of the elections. The uncertainty associated with the forthcoming general elections seems to be having a dampening effect on the sentiment in the markets. The general feeling of insecurity and the related volatility in the market is, as a result, expected to continue during the next few weeks.

Of the 30 Sensex stocks, as many as 24 were hit by profit booking and hence closed at lower levels. The remaining six stocks posted marginal gains. Amongst the major index constituents that recorded losses on Monday were Reliance Industries, down 2.2 per cent at Rs 552.45, Infosys Technologies down 0.6 per cent at Rs 5,359.25, ONGC down 1.74 per cent at Rs 849.55, State Bank of India down 2.09 per cent at Rs 629.1, L&T also lost 1.74 per cent and closed at Rs 591.5, Tata Motors crashed by 3.52 per cent at Rs 487.75 and HDFC was down over two per cent at Rs 624.

Amongst the other losers in the Sensex were Hindustan Lever, Tata Steel, Satyam Computers, HPCL, Grasim Industries, Wipro, Bajaj Auto, Bharti TeleVentures, Reliance Energy, Tata Power, BHEL, Dr Reddy's Laboratories, Hero Honda, MTNL, ACC, Gujarat Ambuja Cements and Zee Telefilms.

The gainers amongst the Sensex stocks were Cipla, HDFC Bank, Hindalco, Ranbaxy Laboratories, ICICI Bank and ITC. Information technology stocks were particularly badly hit and many of the front rung company stocks were down. Amongst the other software stocks that lost ground were i-flex Technologies, HCL Technologies, VSNL, Moser Baer, Polaris Labs, Mphasis BFL, Hughes Software, NIIT, Mastek and Macmillan India. Banking sector stocks that had gained over the last week witnessed selling pressure. The big losers in the banking segment were SBI Bank of Baroda, Oriental Bank, Canara Bank, PNB, IOB, and UCO Bank. However, a few banking stocks continued to attract buying support, particularly ICICI Bank, Union Bank, HDFC Bank, Bank of India, UTI Bank, Andhra Bank and Corporation Bank.