The Hindu Business Line : Construction stocks buckle under selling pressure

ALMOST mimicking Thursday's fall, the markets nose-dived again on Friday, on the back of concerns of rising inflation. The BSE Sensex declined 175 points or 2.1 per cent to 8201.7 points. The Nifty dropped 53 points to close at 2484.4 points.

Over the past week, the Sensex has seen 3.4 per cent of its value eroded, one of the steepest corrections seen in recent months. Leading the declines were the stocks of ONGC, Bharti Tele-Ventures and Reliance. While the fall was across-the-board, the construction, capital goods and cement stocks bore the brunt of the selling pressure.

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The Sensex opened on a mildly positive note, but the bears prevailed almost immediately thumping down the benchmark index. The index remained in the negative territory the entire session, briefly falling below the 8,200-mark to a low of 8,180 before recovering back to its closing level. Dr Reddy's, HDFC and Tata Steel were the only three stocks in the basket of the BSE 30 that gained. The breadth of the market itself was negative. Only 11 per cent of the 2,500 stocks that were traded on the BSE advanced.

Profit booking was witnessed in mid-cap and large-cap stocks alike, although on the BSE mid-cap and small-cap stocks appear to have had a rougher time. The BSE Midcap declined 2.22 per cent. Prominent gainers in the mid-cap space include Sesa Goa, Coromandel Fertilizers, Godavari fertilizers, Sundaram Brake Lining, Ramco Industries, Madras Aluminium and J&K Bank.

The capital goods sector was the worst hit among all sectors. Several market favourites took a beating, ABB, Siemens, BHEL, BEML were among those that declined more than two per cent.

Cement stocks, both large-cap and mid-cap, also suffered losses. The stock of ACC declined by Rs 24 or five per cent to close at Rs 442. The company announced a sharp jump in profits for the second quarter on the back of one-time income. The growth in net profit, however, appears to have fallen short of expectations. This could have been a trigger for selling across other cement stocks.

The stocks of Gujarat Ambuja, Madras Cement, India Cement, Mysore Cement and Prism Cements slumped; the last two mentioned lost more than five per cent in Friday's trading session.

Construction stocks, which have been on a tearing run over the past couple of months, finally buckled under selling pressure. The stock of IVRCL Infrastructure declined by almost nine per cent to Rs 722. The stocks of Gammon India, Era Constructions, Nagarjuna Construction, Simplex Concrete and Hindustan Construction were some of the other stocks that ended the day deep in the red.

In the IT sector, while the frontline stocks remained out of favour, with the stocks of Mastek and KPIT Infosys being the only prominent gainers. The stock of Mastek gained smartly to close at Rs 490.4, up 3.9 per cent from its previous close.

Even the announcement of good results for the July-September quarter by some companies could not win the favour of the bears. Gateway Distriparks declined by Rs 3.15 to close at Rs 210.7, even after it announced a four-fold growth in profits.

The stock of ICICI Bank, which reported a 31 per cent growth in profits after market hours on Thursday, declined by Rs 18.4 to close at Rs 507.70.

The stock of UTI Bank was an exception, ending in the positive territory at Rs 258.2.

Other stocks that gained include ADF Foods, GMM Pfaudler, J&K Bank, and Emami, to name a few.

A few stocks touched new highs on Friday. On the NSE, precisely two stocks, the recently listed India Motor Parts and Accessories and Gujarat Mineral Development Corporation touched their 52-week highs.

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