Shanthi Venkataraman

TUESDAY may have been special for taking the indices past yet another psychological mark of 8,500. But Wednesday turned out to be an even more eventful day for investors and market-watchers alike, as the benchmark indices took them through ups and downs like no roller-coaster ride could.

The volatile swings of the market had both the bulls and the bears active. While in the beginning the negative sentiment had the indices plunge deep into the red, the bulls took an opportunity to buy large-cap stocks at lower levels, pumping the indices up again. Mid-cap and small-cap stocks however, took a thrashing.

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The Sensex ended at 8,487.14 points, marginally lower than its previous closing and snapping four days of gains. The S&P CNX Nifty declined by about 10 points to close at 2,567.30.

It was a day of extreme volatility in the markets. The Sensex falling 238 points to a low of 8,261.5 points had some convinced that the much-awaited correction had finally occurred. But the post-noon session saw the benchmark index staging a quick recovery; for a brief period it even flirted with the positive territory as it touched a high of 8,521 points. Heavy buying in the stock of index-heavyweight ITC, which gained 9 per cent on its going ex-split on Wednesday, could have helped pull the index back to the positive territory. But for every three stocks in the Sensex that advanced, seven declined, causing the index to fall back into the negative territory. The stock of NTPC was another strong gainer among the Sensex constituents, ending about 4.5 per cent higher at Rs 108.10. ONGC, GlaxoSmithKline Pharma and Bajaj Auto were other large-cap stocks that figured prominently in the gainers list.

While large-cap stocks managed to recoup some of the losses sustained in the earlier hours of the session, mid-cap and small-cap stocks remained lifeless throughout. The warnings by market regulators about pumping money in penny stocks appear to have given investors in small-cap stocks the jitters as well. The BSE SMLCAP Index plummeted 3.72 per cent to 6,039.5 points. Close to 30 per cent of the stocks constituting the index declined by more than 5 per cent. Actively traded stocks in this category such as Cosmo Films, Andhra Cement, Uttam Galva, Atul, Bajaj Auto Finance and Hanil Era Textiles were prominent in the losers' list.

The story was not too different for mid-cap stocks either. The BSE Midcap Index declined 2.68 per cent. The stocks of Gujarat NRE Coke, Aftek Infosys, Amtek Auto, Apollo Hospitals and Spice Jet saw more than 8 per cent of their share price eroded. Mid-cap cement stocks JK Cement, Prism Cement and Shree Cement lost about five per cent each.

A couple of mid-cap stocks however, went against the trend. These include the stocks of Mahindra GESCO, Rico Auto, Pidilite Industries, Micro Inks, Kirloskar Brothers, United Breweries and Blue Dart Express.

No particular sector was in favour on Wednesday with the decline more or less across-the-board. Stocks belonging to the banking and capital goods sector were, however, quick to get back on their feet. SBI, Corporation Bank, UTI Bank and Bank of Punjab were prominent gainers.

There was plenty of stock-specific action. The stock of FCS Software made an impressive debut on the bourses; it closed at Rs 178.50, more than three times the offer price of Rs 50.

The stock of Mahindra GESCO gained a handsome 20 per cent, after RBI allowed overseas investors to invest upto 30 per cent in the stock. The stock of Tata Tea gained Rs 14.25 to close at Rs 862.75 after its overseas investment limit was raised to 35 per cent.

The stock of Shriram Transport Finance rose by 5.35 per cent, to close at Rs 126.9. The company is one of the three companies of the Shriram Group, in which buy-out firm Newbridge Capital is to invest $100 million.

(This article was published in the Business Line print edition dated September 22, 2005)
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