Close: Another selloff .. ready to test 12800 ! it appears

As indicated, whenever the news is good markets tend to use that as an opportunity. The cue for today was from FIIs which were sellers yesterday. The market started in red and then led on to deep red after looking for direction in early trades. Market was down by almost 500 points in intraday. The weak global cues added more fuel to the market, heavy selling pressure was seen in all sectors like Automobile, Cement, Pharma, Banks and Engineering. The selling pressure was seen not only in large caps but also in small and mid caps. The Asian and European Markets traded in Red.

Thai stocks had their biggest tumble in eight years after regulators ordered banks to lock up 30 percent of new foreign-currency deposits for a year to curb speculation. This brought back memories of the Asian currency of 1996. As per the new rules..Overseas investors buying baht starting tomorrow will only be able to invest 70 percent of what they transfer, and only recoup all of their funds if they keep the money in Thailand for more than a year, central bank Governor Tarisa Watanagase told a briefing in Bangkok today. Those who withdraw the reserved amount in less than a year will be penalized 33 percent of that 30 percent portion. This is an extreme step and the FIIs reacted with their feet. The repurcussions were felt across the region though such rules are unlikely to be replicated anywhere else.

Sensex closed down 349 points at 13382. Weighing on the Sensex were losses in NTPC (134.25,-5 percent), BHEL (2286.55,-4 percent), L & T (1415.75,-4 percent), RCVL (451.15,-4 percent) and TCS (1141.65,-3 percent). Losses are restricted by gains in Hero Honda (752.8,+0 percent). topnew.gif (1104 bytes)

News driven action.. But ferocity of the fall surprised yet again. Performance as always!

Among other news.. Indian Oil Corp is coming up in marketing of kerosene in portable containers to make the product available in the open market to customers not covered under the public distribution system. This step is to trap the urban and semi-urban kerosene markets. Currently, kerosene meant for PDS is diverted and used for activities like cleaning, polishing and even to workshops for industrial use. As per estimates, almost 17-18 per cent PDS kerosene is diverted and sold at higher prices for such activities. The company is looking at next June to commence production and marketing of kerosene in small containers to fill this gap, it is being considered to market kerosene in small containers, which would also ensure easy availability of the product for public utilisation. The PDS kerosene, which is being supplied at Rs 9 per litre, is perhaps one of the lowest prices in any non-oil producing nation. The cost of the packaged kerosene is estimated to be more than Rs 30. This move towards marketing of Kerosene in small containers and making availability of kerosene in free open market which is max used in urban and semi-urban area will have good movement on kerosene sales. This is positive for the company in a sense though the bigger issue is the under recoveries. We have a cautious view on refineries given their

Among other news, Nalco, the second biggest aluminum producer is undergoing a major capacity expansion within the domestic market and also plans to set up a plant in Indonesia, Vietnam, West Asia and Tajikisthan. The company plans to invest approximately Rs 4100 cr for the project, which includes capacity addition of 0.5 MT a year in smelter, captive power and mining. For the overseas venture the company has earmarked an Rs 16000 cr, which awaits government approval. Nalco has an installed capacity of 3.45-lakh tonnes of aluminium and 1.6 MT of alumina in the domestic market. After the stated capacity expansion, the company will have 1.2 MT of exportable surplus of alumina, which will be by 2008. Currently, exports contribute to around 50% of the company's total revenues. The aluminum stocks closed down in weak market the Nalco closed down by 1.7%.

Technically speaking: Overall market ended red. Volumes were at Rs 4162 cr. The breadth has been in favor of Decliners as they were at 1652 while Advances at 909. The Resistance was at 13641 - 13950 while Support at 13130 - 12928 levels. Technically Sensex is headed for 13450 levels and that could come early in the tomorrow itself given the downward trend.

However the positive is that almost everyone on the street is now negative and thats a positive. However one thing is clear, all upsides will be used as an exit opportunity. So the upsides seem to be a bit capped for now. Such correction was really on cards and it has come. Everyone was expecting one but the Markets surprised the markets by the ferocity of the fall yet again. At this level this should not be surprising.