The Hindu Business Line : Panic over actual results continues

THE increasing political uncertainty and with the possibility of a clear majority in the current elections eluding both the major political parties - Bharatiya Janata Party (BJP) and the Congress - and their allies led to a carnage in the stock exchanges on Tuesday.

Panic selling in all the large cap stocks and index constituents pulled down the major indices. Both the keenly followed Bombay Stock Exchange Sensitive Index (Sensex) and the National Stock Exchange's Nifty crashed after the sustained selling spree that ran unabated throughout Tuesday's session.

At the close of trading hours on Tuesday, the BSE Sensex was down by over 4.1 per cent or about 230 points. The day's close of 5,325.9 points represented a fall of nearly nine per cent compared to the Sensex's month ago level. Since the second exit poll's results were announced about two weeks ago, the BSE index had fallen by nearly 11 per cent. The NSE's broader 50-share S&P CNX Nifty index was down about 3.9 per cent, just a shade better than the Sensex. The Nifty closed Tuesday's session a notch below the 1,700 points mark.

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The sharp upswing in selling during Tuesday's trading session splashed red across all the counters across most industry segments. All the key index constituents closed lower after the selling binge, including all the 30 shares in the Sensex and all but one stock from amongst the 50 shares that constitute the Nifty index. The lone stock in the Nifty that not stayed at previous close levels, but also just managed to post a marginal 0.65 per cent rise was Britannia Industries.

In addition to the political uncertainty, there seems to have been two other reasons why the markets witnessed heavy bear hammering on Tuesday. They include the possible negative fall out on the public sector disinvestment programme due to a change in Government at the Centre and the uncertainty surrounding the impact arising from the Chinese Government's decision to slowdown its overheating economy. The effect of the uncertainties that these factors have created led to a meltdown in the prices of public sector undertakings, banking sector stocks and commodity company stocks.

The biggest losers amongst the Sensex stocks were Hindustan Petroleum Corporation down nearly nine per cent, Tata Steel lower by 7.5 per cent, Tata Power down 7.3 per cent, Tata Motors, HDFC and ITC lost nearly 6.5 per cent.

Hero Honda, Larsen & Toubro and ICICI Bank were all down over 5 per cent. Reliance lost around 5.7 per cent.

The other big losers were ONGC, Satyam Computers, HDFC Bank, Ranbaxy Laboratories, Grasim Industries, Hindalco, Bajaj Auto, Reliance Energy, Bharti TeleVentures, BHEL, Dr Reddy's Laboratories, Cipla, ACC and SBI. The political uncertainty that is currently rocking the markets is also reflected in the fall in prices of public sector undertaking stocks.

The BSE PSU index was the biggest loser from amongst the mainline BSE indices with a close that was over five per cent lesser than its previous close level.

Amongst the biggest losers in the PSU segment were Canara Bank, IDBI and Union Bank down about 11 per cent, Indian Oil Corporation down nearly 10 per cent, GAIL lower by 7 per cent, BPCL lost 8 per cent, Steel Authority of India, Shipping Corporation, National Fertilisers and Punjab National Bank were down over 6 per cent.

Other losers were Oriental Bank, Bank of Baroda and HDFC Bank.