Sensex finally gives in to global cues ! Pulls back!

Market opened yesterday deep in the red given the fact that the US markets derailed on a depressing note overnight, and the Asian markets were down as well and stayed that way right till the end of the trading session. Markets weakened further during the final hour of trade as selling pressure intensified amongst index heavyweights However, there were irregular attempts of profit booking at the lower end to break the rally but none were strong enough to cause any major dent to the selling pressure. Strength was seen in heavyweights across very few sectors like Auto, Pharma and Banks. Weakness was seen in key stocks from the software, telecom and energy. Both Asian markets and European markets ended in red.

Sensex closed down by 172 points at 13601.95. Weighing on the Sensex were losses in RCVL (417.6,-3 percent), Satyam (450.2,-3 percent), Rel Energy (530.55,-3 percent), Infosys (2166.75,-3 percent) and NTPC (149.85,-3 percent). Losses are restricted by gains in SBI (1293.45,+1 percent), Hero Honda (742.05,+1 percent), Grasim (2715.3,+1 percent), Maruti (913.8,+0 percent) and Guj Ambuja (143.2,+0 percent).

Telecom sector was deep in red. Bharti was down. Bharti Enterprises will be the Wal-Mart franchisee and manage the front-end, while the US retailing giant will manage technology and franchising. Interesting to note that Bharti Airtel the listed subsidiary and has no benefits coming from the same except that its services could be sold from the stores as and when they come in. Bharti stock has been bid up significantly on the back of such news of this speculation. Bharti enterprises own many companies and in different areas of operation: To this will be added the Walmart JV. Investors of Bharti Airtel have no reason to be excited. This had the stock a bit down. Rel Comm also took a big knock.

Pharma stocks witnessed a mixed range. As per a leading business news paper reported, Biocon has chalked out plans to invest around US$ 10 m in the next 12 months for the purpose of expanding its facilities and increasing the range of its product offerings. Besides this, the company has envisaged launching its rheumatoid arthritis drug named P1H in India in the next three years. This drug is scheduled to enter Phase III clinical trials in 18 months and will be a branded drug in the event that it gets commercialised. The company is also looking to sell the drug in the international markets after it has been launched in the domestic market. This move is in line with the company's strategy to become a discovery-led company and reduce its dependence on statins for long term. The stock is traded 1% higher.

Going ahead, the worry on the global equities is the US economy. The data coming from there is not encouraging and there is a chance that the interest rates may be cut earlier than usual. This is bad news. US is the engine for the world economy. On the other hand Indian stocks are pricing in excessive optimism of flawless execution. Siemens at 45 times FY 07 earnings is certainly grossly expensive specially in a scenario where price pressures remain and also the fact that the company will hive off its subsidiaries to its parent thus taking away big potential growth areas. Bharti is valued at 22 times FY08 earnings... the list goes on and on. Moral of the above is. That the large caps have some correction to go through and price in some element of negative surprise. Everyone seems to be expecting a bounce.. Will it this time.? Dont be surprised if it does and dont be surprised if it does not. Be ready for both. Thats the right way !

Technically Speaking: Overall market was in red and ended the same. Volumes were at 4049 cr. The breadth has been in favor of Decliners as they were at 1465 while Advances at 1072. The Resistance was at 13662-13733 while Support at 13549 -13506 levels.