The Hindu Business Line : Markets slide on back of global weakness

The equity markets were once again in the bear's stranglehold on Wednesday. They opened on a weak note, weighed down by weakness in the other Asian markets. Buying interest was entirely absent and the markets could not move in to the green at any point during the trading session. The Sensex finally closed below the 13,000-mark with a loss of 1.84 per cent.

The slide across the global equity markets was triggered by a weak profit report from the biggest homebuilder in the US and a drop in consumer confidence renewing fears of a slowdown in the US economy.

A jump in crude oil prices due to geopolitical tensions also contributed to the slide.

Profit booking was observed across sectors. The small-cap and mid-cap stocks were not spared either. The BSE Midcap Index closed 1.5 per cent lower while the BSE Smallcap Index closed 1.8 per cent lower.

The breadth closed on a weak note with more than three declining issues to every advancing one.

Expiration of the March contracts on Thursday caused long unwinding in pivotal stocks such as SBI, HDFC Bank and ICICI Bank, putting pressure on the frontline indices.

The volume in the derivatives segment of the NSE recorded its highest level for March.

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The IT stocks bore the brunt of the selling pressure. The rupee continuing to spiral upward and the upcoming quarterly earnings spooked sentiment in these stocks.

Infosys and Satyam each lost three per cent while TCS and Wipro closed the day with five per cent loss.

The weakness in IT stocks could not be averted by the news of Satyam signing a five-year contract worth $200 million with US-based Applied Materials and Wipro Technologies announcing that it would open a third delivery centre in China.

Wockhardt has announced that it has received USFDA approval for marketing Ketoralac, an anti-inflammatory injection, in the US.

This is the third USFDA approval that the company has bagged in the last 10 days. The stock closed with six per cent gain.

Other pharmaceutical stocks too saw some buying interest, perhaps as defensive buys in a volatile market. Aurobindo Pharma gained 3.8 per cent, Ranbaxy Labs closed three per cent higher, while Pfizer and Merck gained two per cent each.

Sugar stocks moved higher due to CCEA clearing the proposal of the Food Ministry to create a buffer and also to give incentive for exports.

Most of the sugar stocks joined the party. Sakthi Sugars perked up by 15 per cent, while Renuka Sugar, KCP Sugar and Thiruarooran Sugars gained five per cent each; Bajaj Hindustan was up 4.5 per cent and Upper Ganges Sugar 4.2 per cent.

After the close of the trading session, SEBI Chairman Mr M. Damodaran said that the market infrastructure was ready to allow institutions to short-sell.

FIIs will have to be in possession of the security before they short-sell. He said that a system for lending and borrowing of shares for short selling is being put in place.