The Hindu Business Line : Sensex tumbles on broad-based selling

A nervous stock dealer reaching for his cell phone while trading on Friday. Share prices crashed on the BSE, with the benchmark Sensex diving over four per cent in afternoon trade. - Paul Noronha

THE markets were swamped by across-the-board selling on Friday, as the contents of the Common Minimum Programme announced by the new ruling alliance and data on FII pullouts from Indian equities over the past week combined to heighten uncertainty in the stock markets.

The BSE Sensex closed the day 223 points lower, at 4835 points, a 4.4 per cent drop over the previous close, while the Nifty shed 77 points to close at Rs.1508.7 points. It seems to have been a day of broad-based selling, as none of the sectoral indices or broader stock indices such as the BSE 200 or BSE 500 did any better than the Sensex.

Data on the advances to declines ratio showed the number of advancing stocks being overwhelmed by the ones that declined. Within the Sensex basket, 28 stocks lost value, while just two gained in value.

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Banking stocks bore the brunt of the day's selling, with markets reacting adversely to indications that banks may be asked to step up lending to priority sectors, probably at concessional rates of interest. SBI led the list of losers during the day's trade, shedding Rs 46 to close at Rs 484.8 amidst huge trading volumes. The company's announcement of an 18.3 per cent growth in net profits for 2003-04 and a dividend of Rs.11 per share did little to stem the tidal wave of selling.

Bank of Baroda, which dropped by 10.7 per cent to Rs.165.7 and Oriental Bank of Commerce, which lost 7 per cent were the other bank stocks that figured prominently in the losers list.

Among the bank stocks, Corporation Bank and HDFC Bank proved relatively resilient. Corporation Bank actually notched up gains of 3.4 per cent to close at Rs 291, while HDFC Bank shed 1 per cent, much less than many of its peers. FMCG stocks within the index such as Hindustan Lever and ITC also lost less than other index stocks.

Other large-caps came in for some focused selling too. Tata Power and Reliance Energy shed over 7 per cent each, on expectations that the deadline for the sale of power distribution companies to the private players would be pushed beyond June 10, the original date. Tata Motors and Maruti Udyog lost Rs 25 and Rs 30 respectively.

The day was marked by quite a few financial results announcements. But good performance announcements appear to have been largely disregarded in a deluge of bearish sentiment. The SAIL stock dipped by 6.4 per cent to close at Rs 29.2, though the company announced a fourfold increase in profits for the quarter, on the back of higher steel prices and robust offtake. The Dishman Pharmaceuticals stock shed 8.8 per cent, after the company reported a healthy growth in profits for the quarter.

Zee Telefilms and Hindalco were the only two index stocks to post gains during the day. While Zee Telefilms rose by a marginal Rs 1.7 to close at Rs 128.9, Hindalco did better, gaining 1.2 per cent to close at Rs 925.8. Castrol and Hughes Software also notched up gains of about 1.2 per cent each.

Stocks which attracted large trading volumes during the day were Cummins India (which shed Rs 1.6 to close at Rs 109.8), Union Bank (lost Rs 4.8 to close at Rs 56.2) and Power Trading Corporation (marginal gains of Rs 1.3).

FII data released by SEBI after the close of trading hours showed that they net sold Rs 70 crore worth of stocks on Thursday. Mutual funds too have been net sellers on the bourses over the four trading days leading up to May 28.