Close: A full blooded correction ! finally !

Market plunged down into the negative cage right from the start despite positive global cues. There were some signs of recovery at mid day but heavy selling in the final trading hour again pushed the market into deep red. It was the highest loss in a day after May 18. This weakness was largely attributed to the RBI's surprise move to increase the CRR by 50 basis points. Banking, Steel , Cement stocks were the major losers while selling activity was witnessed across almost all the sectors. The global scenario however was positive with both Asian markets and European markets traded in green.

Sensex closed down by 400 points at 13399.43. Weighing on the Sensex were losses in SBI (1242.75,-8 percent), ICICI Bk (819.4,-7 percent), ACC (1036.2,-6 percent), TISCO (453.4,-6 percent) and NTPC (142.85,-6 percent). It was a full blooded correction and the speed of fall has instilled fear which kept away the buyers.

Banking stocks draghed down the market, State Bank of India (SBI), the country's largest bank today raised interest rates on domestic term deposits by 0.25% in a move that could compel other commercial banks to revise their deposit rates as well, while commercial banks have seen lending rise by more than 30 per cent, deposit growth has been only at over 18 per cent. In such circumstances, a hike in deposit rates can draw resources into the banking system to feed the demand for loans. The banking stocks saw panic selling on the CRR (cash reserve ratio hike by 50 basis Major Stocks were down like BOI down by 11%, SBI down by 8.88% and Canara bank by 7.7%.

Zee Tele slipped drastically after the news reported that leading sports broadcaster ESPN Star Sports had won the ICC telecast rights for yje eight-year period starting 2007. Industry estimates that ESPN Star's bid was at $1.1 billion followed by Nimbus at $900 million, Zee ($850 million) and Tensports ($825 millon). Besides the 2011 and 2015 World Cups, the rights will cover ICC's major tournaments such as Champion's Trophy in 2008, 2010, 2012 and 2014, Twenty20 World Cup, Women's World Cup and Intercontinental Cup. Some initial sentimental negatives for ZEE but if we see the broader aspect, a huge investment for a game whose viewership is declining and to recover this investment is unlikely to be an easy job. ESPN Star is targetting to $ 2.7 billion from this contract but that is easier said than done. Zee Tele ended down by (-8.43%) while other peers were also down.

Steel sector was down with the market and the major loser include Tata Steel. As per a leading business daily, the company had revised upwards its bid for the Anglo-Dutch steel maker Corus to US$ 9.2 bn to head off a potential counter bid from Brazil's CSN. Under the revised bid, the new cash offer would be 500 pence per Corus share from the earlier 455 pence per share. The Brazilian steel maker however counter bid some hours later at 515 pence in cash for each Corus share. This fight continues.. We would prbably favour if Tisco lets go.. but surely they have their economics and calculations in place. HIgher price entails a bigger weight on the balance sheet. Avoid Tisco for long was our suggestion. The stock however ended the day down by 7%.

Technically speaking: Overall market was in red and ended the same. Volumes were at 4830 cr. The breadth has been in favor of Decliners as they were at 1974 while Advances at 589. The Resistance was at 13570 while Support at 13200 levels.