The Hindu Business Line : Selling pressure weighs across the board

THE hesitancy that was witnessed in the stock markets in the previous session turned into nervousness on Tuesday, leading to a sharp rise in selling pressure and a steep fall in the benchmark indices. The increased incidence of profit-taking was evident across the board on stocks from almost every sector and was also not only restricted to the frontline stocks. A number of mid-caps too came under selling pressure.

The sudden bout of anxiety in the markets seemed to have set in due to uneasy expectations about the impending corporate results announcements. Though overall the performance of India Inc is expected to be good, sector-specific and company-specific worries are niggling the investing community.

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Further, the possibility of poorer-than-expected annual results being amplified and an abnormal fall in stock valuations continues to be a distinct threat.

As a result, institutional and individual investors seem to be taking a short-term profit booking strategy.

Among the sectors witnessing a mini-meltdown in stocks were information technology, fast-moving consumer goods, banks and public sector undertakings. There were a few gainers among energy and two-wheeler stocks.

After being nearly stagnant during the previous session, the Sensex and the National Stock Exchange's S&P CNX Nifty Index were down by 0.82 per cent and 0.53 per cent, respectively.

The Sensex opened on a firm note at 6,611 points and seemed headed upwards during the first hour of trade on Tuesday. But the positive sentiment did not last and sustained profit-booking kept the index in a negative territory. The Sensex touched an intra-day high of 6,622 points and an intra-day low of 6,532 points, before settling down to close at 6,550 points.

Despite sporadic efforts by bull operators in the market, the index did not breach the previous close level after the first hour of trade.

The traded volume of Sensex stocks was at a low of Rs 610 crore and the ratio of losers to gainers was 4:1.

The story was not different for the NSE. Of the 50 stocks that make up the Nifty, the ones that posted gains on Tuesday were Tata Chemicals, ONGC, Bajaj Auto, BHEL, ICICI Bank, HCL Technologies, BPCL, Bharti TeleVentures, Hero Honda and Dr Reddy's Laboratories.

The top losers among the Nifty constituents were Tata Motors down 4.5 per cent; Maruti Udyog down four per cent, Gujarat Ambuja Cements down 3.5 per cent, State Bank of India, Tata Steel and Tata Power down by about three per cent, IPCL, HDFC Bank, Reliance Energy and Wipro.

The biggest losers among the sectoral indices at the BSE were the BSE Bankex, the index of banking stocks, which was down by nearly one per cent and the BSE Auto index (down 1.34 per cent). All the stocks in the Bankex, except ICICI Bank and Kotak Bank, closed lower on Tuesday.

The major losers from the BSE Auto index were Ashok Leyland, Apollo Tyres, Bharat Forge, Cummins India, Exide Industries, Mahindra & Mahindra, Punjab Tractors, Sundram Fasteners and MICO, in addition to Maruti and Tata Motors. The only gainers from the BSE Auto were Bajaj Auto, Hero Honda, TVS Motors, Sundaram Clayton and Asahi India. IT stocks were a mixed bag.

While a number of frontline stocks were seen lower, a few second-rung software stocks posted gains on Tuesday. Among the gainers were Flextronics, Moser Baer and Patni Computers. Losers included Infosys, Wipro, TCS, Satyam Computers, Polaris Labs and i-flex Technologies.

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