Sensex snaps seven-day rally

Major headlines:

Food inflation rises to 15.1%

Reserve Bank of India hikes interest rates to tame inflation

Atlanta secures Rs163.11 crore order; the stock closes 1.07% higher



Indian indices

What till now seemed to be an unstoppable rally for the domestic markets, which got halted by the Reserve Bank of India (RBI)’s move to hike policy rates, the rising inflation worries and weak global cues! The domestic markets ended the volatile session on a negative note snapping a seven-day winning streak, as the RBI's move proved to be a speed-breaker for the markets that also hampered the investors’ sentiment to an extent.

The banking shares rose after the RBI signalled that it may be nearing a pause in its current tightening cycle. The realty stocks gained after the government said that the foreign investors in the country's real estate sector will have to remain invested for a minimum of three years and rejected industry claims about the policy restricting foreign direct investment (FDI) inflows.

Food inflation rose to 15.1% for the week ended September 04, 2010 as compared to 14.56% seen in the previous week. The RBI hikes repo rate by 25 basis points to 6% and the reverse repo rate by 50 basis points to 5%

The Sensex started the day on a feeble note at 19477, 25 points lower tracking weak Asian cues and remained volatile till the noon trades. However, the index extended its losses after the food inflation rose and also after the RBI's move of hiking interest rates, which came above the market expectation of 25 bps rise for both repo and reverse repo rates. However, the index soon recovered owing to the buying in the banking and realty shares, leading the Sensex to touch the days high of 19637. The Sensex, however, dipped from the day’s high level as the IT stocks slipped on worries about a slow global economic recovery, coupled with the weak Asian and European markets, which dragged the Sensex lower to hit the day’s low of 19383.
At the finishing line, the Sensex closed at 19417, 85 points lower. The Nifty shut at 5829, 32 points down.

Bond Market: India's 10-year bonds fell, pushing yields to their highest level in more than a week, after the central bank raised rates for the fifth time this year. The yield on the 7.8% bond maturing in 2020 rose to 7.97%.

Rupee Update: The rupee traded at 46.30 per dollar, compared with 46.32 earlier.

Market Outlook: All eyes tonight will be glued at the Producer Price Index (PPI), Initial Jobless Claim and continuous claims accompanied with the Philadelphia Fed activity on the US data front.

Global signals

The European shares fell on Thursday (September 16, 2010), after data showed that the British retail sales volumes fell last month for the first time since January.

All the major Asian indices shut in the negative territory.

The US stock index futures point towards a lower start on the Wall Street. The investors will keep an eye on the release of US weekly jobless claims data and US producer price data for August.

Market sentiment

The market breadth was unconstructive, as declining stocks outpaced the advancing ones. Of the 3,087 scrips traded on the BSE, 1,863 shares fell whereas 1,081 shares rose. Hundred and forty-three shares traded unchanged.

Sectoral & stock screening

BSE Realty was the top performer, rose by 1.22% after the government said that the foreign investors in the country's real estate sector will have to remain invested for a minimum of three years. BSE Bankex was the second gainer, up by 0.59%. On the other hand, BSE IT dipped the most by 2.29%, while it was an outperforming sector in the previous trade.

Among 'A' group stocks, top three gainers were — Alstom Projects was the major gainer, up by 6.26%, followed by Godrej Consumer Products that surged by 5.91% and Suzlon Energy rose by 3%. Top three losers were - Exide Industries slid the most by 5.69%, followed by Pantaloon Retail that fell by 4.38% and Jubilant Organosys lost by 3.30%.

Viewing volumes

Wind turbine major - Suzlon Energy was traded the most, with over 1.02 crore shares changing hands on the BSE, followed by India's second largest developer - Unitech (0.76 crore shares), steel maker- Ispat Industries (0.33 crore shares), realty major - DLF (0.27 crore shares) and public sector bank - IDBI Bank (0.26 crore shares).
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