The Hindu Business Line : Markets slip on doubts over Govt policy

APPREHENSIONS about the policy direction of the newly elected Congress-led Government continued to dog sentiments in the stock market on Wednesday too.

As a result, though the markets opened on a positive note and a sense of cautious optimism prevailed almost throughout the trading period on this mid-week session, weakness again set in towards the close, leading to a fall in the major indices.

The sentiment in the markets seems to be affected by worries about the new Government's policy directions for the services and manufacturing sectors, including whether higher taxation would be resorted to for funding some of the proposed higher spend on rural infrastructure and pro-poor schemes.

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However, the movement in the market seems to be broadly on predictable lines, with most large investors opining that a yo-yoing of the indices during the difficult period of Government formation will be inevitable.

On the BSE, the 30-share Sensex opened on a strong note at 5,116 points, up 14 points over the previous day's close of 5,102 points. However, a brief spurt in selling pressure pulled the index into negative territory within the first 90 minutes of trading.

All through the mid-session, the Sensex continued to trade higher than the previous close and went on to touch an intra-day high of 5,164 points towards the last hour of the trading session.

But, another strong bout of selling during the last hour pulled down the Sensex back into the red. At the close of the day's trade on Wednesday, the BSE index at 5,082 points had lost over 20 points compared to the previous day's close.

There were a total of 19 stocks in the index that had lost ground compared to the remaining 11 that posted gains at the close of trade.

Though index heavyweights were troubled by the weak sentiment, specific stocks in a couple of sectors including the information technology, banking and to some extent pharmaceutical industry had fared better on Wednesday.

Among the bank stocks that went up and closed with gains during the day included ICICI Bank, Punjab National Bank and Corporation Bank.

Among the Sensex constituents, the losers were ITC, Infosys Technologies, Hindustan Lever, ONGC, State Bank of India, Tata Motors, Satyam Computer, Tata Iron and Steel, HDFC Bank, Wipro, Hindalco, Hero Honda, Maruti Udyog, ACC, Gujarat Ambuja Cements and MTNL.

The Sensex stocks that gained were BHEL, Zee Telefilms, Tata Power, Cipla, Dr Reddy's Laboratories, Hindustan Petroleum Corporation, Bharti TeleVentures, HDFC, ICICI Bank and Reliance Industries.

The other public sector undertaking stocks that gained included Bongaigaon Refineries, State Bank of Bikaner, Bharat Electricals, Chennai Petroleum, Mangalore Refineries and Petrochemicals and Madras Fertilisers.

In the pharmaceutical sector, the stocks, other than those in the Sensex, that gained were Nicholas Piramal, Shasun Chemicals, Kopran, Divi's Labs, Sun Pharmaceuticals, Orchid Chemicals and Aventis Pharmaceuticals.

The information technology stocks that closed higher were Mphasis BFL, NIIT, Moser Baer, i-Flex Technologies, Mastek, HCL Technologies, Kale Consultants, Ramco Systems, Rolta India, SSI Ltd and Tata Elxsi.

At the NSE, the S&P CNX Nifty index was down almost 0.5 per cent at 1,598.8 points. Among the other losers in the index during the session were Mahindra & Mahindra, Dabur, National Aluminium and Wipro. The most active stocks on the NSE were Maruti Udyog, Satyam Computers, Reliance Industries, Tata Motors, ONGC and State Bank of India.

Marking the point that there were a number of mid-cap stocks that continued to attract buying support, even though the overall market sentiment was bearish on Wednesday, the NSE's CNX Midcap 200 index closed higher by 0.6 per cent.