The Hindu Business Line : Slide spree: Most sectors take a beating

THE downward spiral in stock prices that seemed to have started by the middle of last week looked unstoppable, with the second session this week also witnessing a steep fall.

A decline in stock prices was seen in almost all major industry sectors, with the exception of the auto sector where quite a few mainline stocks were in the black.

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Selling pressure was evident right through the session on Tuesday and the virtual absence of foreign institutional investors in the market made matters worse.

The lack of sustained buying support was also telling on a number of index stocks, all of which dragged down the major benchmark indices southwards. There were a couple of blips during the course of the day's session when the indices crossed into positive territory; but for the most part, they were locked below the previous day's close levels.

The benchmark indices - the Bombay Stock Exchange's Sensitive index (Sensex) and the National Stock Exchange's S&P CNX Nifty index - opened the day on a positive note and then went through a series of ups and downs quickly within the first two hours of the trading session.

However, despite the erratic movement of the indices, a considerable level of buying support was evident during the first half of the session.

During the second half, the support suddenly seemed to have petered out and, as a result, holding back the surge in selling pressure became even more hard. Selling swelled among stocks from all major sectors such as pharmaceuticals, cement, information technology, banking, FMCG and metals.

The major reasons being attributed for the current poor sentiment in the markets include the possibility of the latest quarterly earnings numbers being lower than expectations. This could be especially true for information technology companies, many of which are expected to announce their quarterly results later this week.

Investors are also said to be concerned about the software sector's prospects in the light of the rising value of the rupee. The domestic currency posted a further rise in value during the last few days.

Reflecting the bearish sentiment in the market, the BSE Sensex closed on Tuesday at 6,222 points, down by about 86 points or 1.36 per cent. The other broader BSE indices, including the BSE 100, 200 and 500 indices, were all down too.

Five stocks fell for every one stock that posted gains on Tuesday. With this fall, the Sensex declined by over 6.4 per cent during the last five trading sessions. The trading value of Sensex stocks was also a low Rs 798 crore during Tuesday.

At the NSE, the 50-share Nifty index was down over 1.5 per cent at 1,952 points. There were enough indicators that the selling spree was not restricted to the constituents of the benchmark indices alone; it was amply showcased in the steeper fall of the CNX Nifty Junior and the CNX Midcap 200 indices, both of which fell by over 2.6 per cent.

The major gainers in the Nifty in Tuesday's session include Tata Motors (up 1.08 per cent), Maruti Udyog (up over 0.8 per cent), Bajaj Auto, Tata Power, ICICI Bank and HCL Technologies. The losers in Nifty 50 include Sun Pharma, Cipla, Colgate Palmolive, Ranbaxy Laboratories, Indian Hotels, Hindalco, VSNL, SAIL, Dr Reddy's Laboratories and National Aluminium.

Pharma stocks came under fire on Tuesday due to market rumours that the Government was considering changing excise duty rules by levying the cess on the maximum retail price rather than on the factory price, as is currently the norm.

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Slide spree: Most sectors take a beating