The Hindu Business Line : Bloodbath at the bourses continues

The unmitigated bear hammering that was witnessed on Wednesday now looks to have been just the beginning of a rocky ride for the major stock market indices in the country. Stocks covering a broad swathe of industry sectors have come under attack from bear operators, and the result has been a splash of red that has layered indices that track even mid- and small-cap stocks.

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The sudden nose-diving of the indices triggered by a `tsunami' of selling pressure must have hit unwary investors on Wednesday. But while the domino-style spread of selling pressure on Wednesday would not have tricked investors into thinking that a U-turn was possible, Thursday's session could have fooled many among the retail investing population into thinking that an end to the correction was near.

While many in the investing community knew a correction to the overheated indices was due, most did not expect when it happened on Wednesday.

On expected lines, Thursday's session opened on a lower note and the indices were quickly dragged deeper into the red during the first 90 minutes of the session. Selling pressure was observed in almost all the sectors such as banking, automobiles, steel, aluminium, pharmaceutical and amongst PSU stocks.

The continuation of selling pressure was also not localised to index constituents alone and extended into a number of mid-cap stocks.

After an initial wave of bearishness, the next three hours of trading at the exchanges on Thursday witnessed a resurgence of buying support and the indices, as a result, seemed to recover from their day's lows. Twice during the next three hours, the indices broke into positive territory and seemed poised to make a comeback, giving day traders and investors a glimmer of hope.

However, the party did not last long and soon the re-emergence of strong selling pressure set a downward tone to the indices. Pharma and steel stocks, which have been on a song for the past few weeks, seem to have been specifically targeted by the bear club on Thursday. As a result, during the last two hours of the trading session on Thursday, the major indices zigzagged southwards.

Sufficient buying support to reverse the trend did not pick up steam right through the remaining part of the session and hence, the markets closed the day deep in negative territory for the second consecutive day this week.

At the BSE, the 30-share Sensitive Index (Sensex) closed on Thursday at 6367 points, just about 40 points shy of the day's low of 6324 points. By final count it had lost about 1.42 per cent over the previous close, though at one point during the session, it had hit an intra-day high of 6481 points, which was about 22 points higher than Wednesday's close.

There were 26 losers against a mere four gainers from out of the Sensex's 30 stocks. There was, however, no significant change to the traded volume of Sensex stocks. All the major sectoral indices such as the BSE PSU, the Bankex, the BSE Teck, BSE HealthCare and the BSE Auto were all in the negative and even the broader BSE 100, 200 and 500 indices closed the day with loses.

The only four stocks that posted gains from out of the Sensex 30 were Bharti TeleVentures, Hero Honda, HPCL and Reliance Energy.

The story was not much different at the National Stock Exchange (NSE), with the 50-share S&P CNX Nifty index recording a 1.67 per cent drop. Here too, there were only about five stocks that posted gains at the end of the session on Thursday. They included Indian Hotels in addition to the four that also registered increases at the BSE.

Some of the biggest losers were MTNL, HCL Technologies, Oriental Bank, Tata Steel, Sun Pharma, Steel Authority of India, HDFC Bank, Satyam Computer, Shipping Corporation and GlaxoSmithKline Pharmaceuticals.

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