Market in correction mode

The Indian stock market seems to have taken a breather after almost 100% gains for the indices since March 2009. And the market is probably in a correction phase wherein it has declined by over 6.5% from its high for calendar year 2009 of 17493 made on October 17, 2009. On a day when all the global indices staged a weak performance, Indian market slumped strongly and lost close to 400 points. The day started with the weak overnight US and European closing, each losing close to 1%. Today all the major Asian indices closed in red with loses in the range of 0.14-2.83% each, with China's Shanghai Composite hit the most. However, today, the European indices bucked the global negative trend and opened in positive zone. At the time of writing this report, they were trading with gains in the range of 0.31-0.80% each, while FTSE 100 was trading at 5213 with 22 points or about 0.42% gains. The 1% hike in the statutory liquidity ratio (SLR) by the Reserve Bank of India (RBI) in its quarterly monetary policy 2009-10 dragged the banking stocks down. The impact was doubled with heavy selling in realty and metals space and the Sensex ended the day in red and fell for the second consecutive day with a loss of close to 2.31%.

As expected, the benchmark BSE- 30 (Sensex) opened gap-down at 16699, lower by 42 points to its previous close. The Sensex never saw this level throughout the day and closed 2.31% lower at 16353, however before it recorded a low of 16312. The market ignored the positive cues from the European markets and closed substantially lower to its previous close on the back of 1% SLR hike along with the heavy selling in realty, metals and banking space. Nifty lost 124 points to end the day at 4847. The market breadth was very negative as out of 2,790 stocks traded on the BSE – only 442 stocks advanced, whereas 2,281 stocks declined. Sixty-Seven stocks closed unchanged.

Among the sectoral indices, all the sectoral indices ended the day in red declining by over 1% each. BSE Realty fell the most, by 6.24%, followed by BSE Metal that slid by 5.82%. All other indices ended the session in the range of 1-4% down. However, on the back of the hike in SLR BSE Bankex lost 3.82%. On the stocks’ front, PTC India jumped the most and surged by 6.74% to Rs97.35 followed by Union Bank that rose by 3.22% to Rs256.25 and Wipro that advanced by 2.18% to Rs604.15. While stocks like Godrej Consumer Products, Cadila Healthcare, Dr Reddy’s Laboratories, Tata Motors and HPCL ended the day with gains in the range of 1-2%. Among the losers, Hindalco Industries fell the most by 7.92% to Rs126.15, followed by Tata Steel that fell by 7.26% to Rs501.30 and Bharti Airtel slid by 7.08% to Rs306.60. Stocks like Reliance Communications, DLF, ICICI Bank and Sterlite Industries declined in the range of 5-7%.

On turnover front, Over 2.20 crore shares of Unitech changed hands on the BSE followed by Ispat Industries (1.07 crore shares), Suzlon Energy (0.66 crore shares), Ambuja Cement (0.63 crore shares) and IFCI (0.59 crore shares).

Events outcome

* The RBI keeps the repo rate, reverse repo rate, cash reserve ratio (CRR) unchanged while SLR is hiked to 25% from 24%.
* Madras Cements net profit rises to 49.58%.
* Ipca Lab’s Q2 net profit grew by 75%.
* Cadila Healthcare’s top line grew by 27.7%.
* Wipro's revenues grew by 7.5% sequentially.
* Crompton Greaves’ net profit surges by 47.07%.
* Power Finance Corporation's net profit zooms by 93.70%.
* Tata Steel’s net profit dips by 49% to Rs902.94 crore.