The Hindu Business Line : Sensex still in correction mode; sheds 120 points

THE bourses continued their trend of corrections for the third day this week. The day's trading, characterised by extreme intra-day volatility, ended with the indices closing at their lowest level since November 25, 2004.

The Sensex shed over 193 points intra-day, but ended trade marginally higher with a loss of 120.13 points at 6102.74. The Nifty also charted a choppy route with an intra-day loss of 65 points, before closing at 1913.6, down 38.45 points from Tuesday's close.

The markets opened strong on expectations of Infosys results. But initial gains could not be sustained and the indices slipped into the red by mid-morning. Buying support, especially in cement stocks, at the lowest levels during the day propped the indices up, although only marginally.

Though corrections have been expected for sometime now, the loss of value in the market in the last five days of trading have left sections of the market worried. Short positions are being squared off and brokers also said that margin calls are beginning to be a concern. Most broking houses had pegged 6100-level of the Sensex as the bottom. The Sensex closing barely above this level is seen as worrying, said a broker.

Even though Infosys exceeded market expectations on their bottomline figures, the scrip ended trade very much in the red. The scrip lost Rs. 67.60 today and closed at Rs. 1903.35.

Among the Sensex stocks, Cipla lost 5.73 per cent to close at Rs. 252.55, Zee Telefilms shed 4.57 per cent to close at Rs. 154.75 and Tata Power lost 4.57 per cent to close at Rs. 339.15.

"We had expected volatility in the shorter term. Markets should take cognisance of the fact that that we have had a comfortable run up since 2004's lowest level of May. In the long term our target continues to be 7450 by March 2006," said Mr Amitabh Chakraborty, Vice-President & Head of Research, Kotak Securities.

The RBI Governor's announcement expressing his intention to tax foreign institutional investors could also lead to further choppiness in the market, said brokers.

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