Close: As said.. finally a full blooded correction !

Deep fall continued for the second day, Market started Red at the beginning even of positive global cues. There were some signs of recovery at early trades with markets up almost 90 points in intraday but heavy selling continued and that again created history. It was the second highest fall in a day after May 18. The hike in CRR effect was given as the excuse which pushed Banks into negatives. The selling pressure was seen not only in large caps but also in mid and small caps. The intensive selling pressure was witnessed in all sectors like Cement, Software, Pharma, FMCG. The Asian and European markets traded in mix.

Sensex closed down by 404 points at 12996. Weighing on the Sensex were losses in ACC (945.25,-9 percent), Grasim (2490,-8 percent), RCVL (396,-8 percent), Guj Ambuja (127.5,-7 percent) and Bharti Tele (564,-7 percent). There were no winners at all.

L&T won a contract valued at over Rs 5400 cr from the GMR for the expansion and modernization of the Delhi International Airport, scheduled to be commissioned in time for the Commonwealth Games in 2010. It is an end-to-end contract for design and construction of the passenger terminal and one of Asia?s longest runways. L& T is in contention for the Mumbai airport as well. The company also intends to bid for the Kolkata and Chennai airports when they come up for tendering. Order book continues to overflow but the valuations at 24 times FY 08 leaves little upsides was our view in hunters pick. The stock started off really strong but then fell closing down by 3.60%.

Grasim is planning to acquire a stake in Austrian firm Lenzing. Lenzing is into manufacture of Pulp, Paper and Fibre for textiles applications and the Non-woven industry and plastics. The company has revenue of Rs 5400 cr in the year 2005. The Lenzing has production capacity of 453800 tonnes in US, UK, Austria, China and Indonesia. Grasim's businesses comprise viscose staple fibre, cement, sponge iron, chemicals and textiles. Recently, Grasim had signed an agreement to take over the assets of Hubei Jing Wei Chemical Fibre Company through a joint venture. The acquisition will help Grasim to increase the fibre production capacity. The stock closed 6% lower and its group companies Hindalco closed 4% lower and Aditya Birla Nuvo also closed 2% lower in weak market.

Technically speaking: Overall market was in red and ended the same. Volumes were at Rs 4913 cr. The breadth has been in favor of Decliners as they were at 2124 while Advances at 442. The Resistance was at 13791 - 13399 while Support at 12708 - 12409 levels. Technically Sensex is headed for 12550 levels and that could come early in the morning tomorrow itself given the negativism. 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. The economic data was not very encouraging and that brought in more selling.

Mid cap stocks have also crashed. interesting to note that they had not run up as much and we believe that these will be the ones where interest will come in when it comes. We believe that the large cap stocks will find the going tough as valuations will be screened even more now.