Profit booking drag markets from record highs

After making record highs in the previous sessions, the domestic markets fall as profit booking emerged in information technology, PSU and telecom stocks

Major headlines

HCL Technologies, Novotech ink pact; the stock ends 1.76% lower

Jain Irrigation Q2 bottom line rises 45.65% yoy; the stock closes 2.94% up

Aban Offshore Q2 consolidated net profit rises marginally; the stock closes 0.91% higher



Indian indices

The domestic markets closed the first session of new week on a negative note after seeing profit booking all day long. The markets fell from a record high amid concern that the rally, which made the shares most expensive, was excessive in relation to the outlook for corporate earnings. The investors locked in profits after the markets scaled record closing highs on the beginning of Samvat year 2067 on Friday (November 05, 2010). Weak European indices also weighed on the investor sentiment. The Mid-cap and Small-cap indices outperformed the Sensex in today’s trade.

HDFC Bank dropped for the first time in eight days, leading a decline in financial stocks. Power Grid Corporation of India, the biggest transmission company, declined the most in more than six months after fixing price band of its follow-on public offer at a discount.

The Sensex began the session 37 points higher at 21042. In initial trades, the index hit the day’s high of 21076. However, the Sensex was unable to hold on to its gains and fell in early trades as profit booking emerged. The index was in the negative zone throughout the morning session. The index carried its losses in the afternoon session, hitting the day’s low of 20822 in last hour of trades as the European markets traded lower along with selling pressure in IT, TECk and PSU stocks.

At finishing line, the Sensex shut at 20852, down by 153 points. The Nifty closed at 6273, lower by 39 points.

Bonds and Rupee update: India’s 12-year government bonds rose on speculation that the central bank will purchase existing securities to ease a cash shortage in the financial system. India’s rupee dropped by the most in almost two weeks as the dollar extended gains following US jobs data that beat economists’ forecasts.

Market sentiment

The market breadth was unconstructive as declining stocks outdid the advancing ones. On the BSE, out of the 3,083 stocks, 1,520 fell while 1,451 rose. Hundred and twelve stocks traded unchanged.

Sectoral and stock screening

Ten sectors closed lower, while three managed to rise. The BSE IT was hit the most, down by 1.54%, followed by BSE TECk that fell by 1.33% and BSE PSU declined by 1.23%. The BSE Health Care (HC) was the major gainer, surged by 0.65%, followed by BSE Realty that gained by 0.37% and BSE Metal rose by 0.34%.

Among 'A' group stocks, top three gainers were - Ambuja Cements gained by 7.73%, Canara Bank advanced by 6.48% and Rashtriya Chemicals surged by 6.12%. Top three losers were - Mphasis fell by 4.68%, Hindustan Petroleum Corporation declined by 3.81% and Dish TV India lost by 3.60%.

Viewing volumes

Industrial finance company - IFCI saw highest trading, with over 0.79 crore shares changing hands on the BSE, followed by JP Group firm - Jaiprakash Associates (0.38 crore shares), public sector power utility- Power Grid Corporation (0.34 crore shares), PSU firm - Rashtriya Chemicals (0.30 crore shares) and Zee Entertainment Enterprises (0.29 crore shares).

Global signals

The European shares drifted lower, as telecom stocks declined along with investors taking profits and selling on technical grounds after a key index closed at its highest in more than six months in the previous session.

The Asian indices closed in the positive territory. Japan's Nikkei index surged over 1%.

The US stock index futures point to a lower opening on the Wall Street. The investors will keep an eye on earnings of companies like Frontier Communications Corp, Priceline.com, Progressive Corp and Sysco Corp, which are scheduled to be out today.

Market Outlook: There are no major economic data in the US tonight.