The Sensex finished below the pyscological level of 11,000 as selling pressure continued for the second straight day. The sentiment was worsened by a flurry of negative news, which confounded the situation further. Marketmen also attribute today's sharp slump to margin selling.
The BSE Sensex is in correction mode as it tanked another 453 points on the back of a whopping 846 point debacle yesterday. The correction on the second consecutive day came about on acute selling pressure as skeptic investors rushed to book profit at every new high.
The Sensex ended 452.82 points (3.98%) lower, at 10,938.61. It has slipped below the 11,000 mark for the first time since 22 March 2006.
The S&P CNX Nifty slipped 142 points (4.19%) to 3,246.90.
The BSE mid-cap index lost 4.02% while the BSE small-cap index has lost 4.54%.
The Indian Government said late on Wednesday that it planned guidelines that would help distinguish between investors and stock traders, so as to tax them differently. That raised concerns regarding foreign funds being taxed at a much higher rate than those prevailing now.
A clarification from the Finance Minister P Chidambaram that no FIIs have been assessed as traders came as a whiff of fresh air for the benchmark index that was gasping for breath.
It opened with an upward gap of 159 points, surged to hit a high of 11,697.11, as buying continued. However, minutes after hitting the high, it tanked lower.
It had plunged to a low of 10,799.01 in the last session of trade as investors became obsessed with selling.
The benchmark index wavered 898 points for the day, indicating a high degree of volatility.
The market breadth was strongly bearish on BSE. The advance to decline ratio was pegged at 1:10. Only 344 shares advanced, compared to 2,138 that declined. A meagre 33 remained unchanged.
The total turnover on BSE amounted to Rs 5,036 crore, which is lower than Thursday's turnover of Rs 4,863 crore.
Among the Sensex pack, 28 were battered while only 2 received a boost.
Cipla was the biggest loser, down 9.3% to Rs 222 on 21.44 lakh shares.
Tata Steel slumped 6.50% to Rs 510 after it reported a 14% fall in net profit for the quarter ended March 2006. It dipped more than 10% yesterday. As many as 35.26 lakh shares were exchanged on the counter.
FMCG doyen, HLL plunged 5.61% to Rs 244 on 10.83 lakh shares.
IT stocks Wipro (down 5.50% to Rs 482), Satyam Computers (down 5.37% to Rs 678) and TCS (down 2% to Rs 1885) were not spared the noose either.
SBI plunged 5% to Rs 863.10 after it reported a fall in net profit for the quarter ended March 2006. State Bank of India's net profit declined 19.8% to Rs 853.29 crore from Rs 1,064.88 crore in Q4 March 2005. Net interest income declined 10% to Rs 3,554.57 crore from Rs 3,950.65 crore. Other income rose 58% to Rs 2,677.02 crore (Rs 1690.65 crore). A sharp surge in taxation provision from Rs 187.03 crore to Rs 1,084.74 crore impacted the bottom line. The counter clocked a volume of 16.14 lakh shares.
Tata Motors lost 0.91% to Rs 865 after it reported a net profit after tax of Rs 458.11 crore for the quarter ended 31 March 2006 (Rs 388.17 crore). Total income increased to Rs 6,887.17 crore (Rs 5368.47 crore). It had earlier slumped all the way to Rs 810 in intra day trade, but recovered as results were in line with market expectations.
Bajaj Auto stunned the market. It was down a good 10.5% to hit a low of 2,660 closed 0.10% lower at Rs 3,010. Bajaj Auto's Q4 March 2006 profit-after-tax (before prior period and extra-ordinary items) jumped 51.5% to Rs 333.64 crore (Rs 220.22 crore). Net sales rose 31.5% to Rs 2,165.86 crore (Rs 1647 crore). Other income declined 18.5% to Rs 103.09 crore (Rs 126.55 crore). The stock recovered as the results were better than analysts' expectaions.
Jammu & Kashmir Bank slumped 10.83% to Rs 370 on poor Q4 results. The bank's net profit declined to Rs 22.79 crore for Q4 March 2006 as compared to Rs 45.86 crore Q4 March 2005. Total income has increased from Rs 426.07 crore to Rs 499 crore.
As per BSE data, 676 stocks hit the lower limit on BSE by late trading today. This includes stocks which hit the lower limit in intra-day trade and recovered after hitting the lower circuit limit.
As many as 303 stocks from trade-to-trade segment hit the lower limit. A total of 120 stocks from B2 group hit the lower limit. A total of 88 scrips from TS group hit the lower limit.
53 scrips from the S group hit lower limit and 47 stocks from Z group hit the lower limit.
Some of the top losers among small-cap and mid-cap space were Todays' Writing Products (down 20% to Rs 54.05), Birla Power (down 18% to Rs 27), Sree Rayalseema Alkalies (down 15% to Rs 13.10), Mahindra Gesco Developers (down 15% to Rs 876), Ciba Speciality Chemicals (down 13% to Rs 316), REI Agro (down 13% to Rs 127), ITI (down 11% to Rs 50.50), Nahar Exports (down 11% to Rs 89), Chemfab Alkalies (down 11% to Rs 129), Panacea Biotech (down 10.9% to Rs 346), Gateway Distriparks (down 10% to Rs 214) and NDTV (down 10% to Rs 216). There were a number of stocks which were down between 2-9% for the day.
As per provisional data, FIIs sold shares worth a net Rs 865 crore on Thursday (18 May). There was heavy selling by FIIs recently. In five trading sessions, between 11-17 May, FIIs sold shares worth a net Rs 2,865.80 crore.
According to the latest data available with the Securities and Exchange Board of India (SEBI), FIIs have sold a gross of Rs 12,891.40 crore worth of shares over the past five days, while purchasing shares worth a gross Rs 10,025.80 crore in the same period.
There are also apprehensions in the market that the foreign investors might consider moving away their funds from emerging markets following signals of further rate hikes by the US Federal Reserve.
On 17 May 2006, FIIs were net sellers of stocks to the tune of Rs 423.50 crore. They have been on a selling drive for the past couple of days.
Domestic mutual funds have offered some solace to the falling market, and purchased stocks to the tune of a net Rs 193.30 crore.
Concerns of rising inflation dragged the US indices for the third straight session, with the Dow Jones tumbling 77 points, to close at 11,128. The Nasdaq declined 15 points on weak tech stocks and closed at 2,180.
Crude oil prices edged higher, with the Nymex light crude oil for June series rising by 78 cents to close at $ 69.45 a barrel, off its day's low of $ 67.85. In the commodity segment, the Comex gold for June delivery slumped $10.90, to settle at $ 680.90 an ounce.
The Nikkei rose 0.42% on Friday as investors, encouraged by stronger-than-expected gross domestic product (GDP) data, picked up Canon Inc., and other stocks that had recently declined. The Nikkei average gained 68.27 points, to 16,155.45. It ended with a second straight weekly loss, declining 2.69% since last Friday.