The Hindu Business Line : Benchmarks surrender initial gains on volatile day

ON Wednesday, the markets opened with a bang, across the board gains were recorded in the initial hour. The bulls, however, failed to keep their foot on the gas pedal as most of the indices lost steam in the subsequent hour. Post lunch, the sentiment was cautious, which appears to have been prompted by a prominent fund house sending out feelers of having downgraded the Indian market. The sentiment was reflected in the advances-declines ratio, which was nearly even with nine stocks advancing for every 10 that declined.

High volatility was recorded in the morning with the Bombay Stock Exchange Sensex recording a sharp rise followed by a steep decline. The post-lunch session was range-bound, with the bulls and bears scoring points over each other. The index later closed with a marginal drop of nine points at 8308.78 points.

An overwhelming positive sentiment in the initial hour pushed the S&P CNX Nifty to a day-high of 2519 points. Failing to sustain the pace generated in the opening hour, the index quickly went into a correction mode until noon. Post lunch, the Nifty zigzagged its way alternating between positive and negative territories. The index closed on a sedate note at 2489.1 points, recording a marginal drop of 0.14 per cent.

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Widespread declines could be gauged from many sector-oriented indices closing in the red; the consumer-oriented indices were the only ones to record advances.

After recording a series of gains in the previous three sessions, sentiment in the IT sector turned negative. Major losers in the IT sector were NIIT, Spanco Telesystems, Micro Technologies, MRO-TEK, MosChip, PCS Tech, Moser Baer and Silverline Technologies. The bearish sentiment crept into large-cap stocks also, as Wipro, TCS and HCL Technologies shed more than 1 per cent.

A predominantly bearish sentiment prevailed in the auto sector, as a majority of the BSE-Auto index constituents closed in the red. Prominent among them were Bajaj Tempo, Eicher Motor, Escorts, Punjab Tractors and Tata Motors. Two-wheeler manufacturers also dropped by more than one per cent. Accompanying them were auto-ancillary stocks — Bharat Forge, Exide, FAG Bearings and Mico. Bajaj Auto and Maruti, however, bucked the trend.

A mixed trend prevailed in the steel sector with Essar Steel and SAIL featuring among the losers, and Ispat Industries and Tata Steel advancing marginally. Bearish sentiment prevailed in the aluminium sector; majors Hindalco and Madras Aluminium were among the losers. Sterlite, the other major in the metal space, recorded a gain in excess of 1 per cent. Losers among the lower-rung stocks in the metal space included National Steel Agro, Kirloskar Ferrous and Southern Iron and Steel.

Continuing with its northward march, the FMCG sector recorded a 1 per cent gain. Leading the rally in the FMCG sector were cigarette players VST Industries, Godfrey Phillips and ITC. Other major gainers were Liberty Shoes, Gillette, Venky's India, Jindal Photo, Tata Tea and RayBan Sun Optics, all of which recorded a more than 1 per cent gain.

Stock-specific action

Sharp gains in global coffee prices over the past few days appears to have prompted a rise in Tata Coffee, even as trading activity was low on its counter. The stock recorded a 1.4 per cent gain.

Intense trading activity was recorded on JSW Steel's counter. The steel major, which announced plans of investing about Rs 35,000 crore in Jharkhand, shed more than 2 per cent.

India Cements, which reported second quarter earnings of Rs 58.5 crore against a loss in the same period last year,, dropped by 1.6 per cent to Rs 96.5.

Major gainers among the Nifty constituents were Dr Reddy's, Sun Pharmaceuticals, Zee Telefilms, MTNL, GlaxoSmithKline Pharmaceuticals and HLL. Losers included Hindustan Petroleum, Ranbaxy, Dabur, SCI, Tata Power and Cipla.

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