Sensex slumps on sudden sell-off

The Indian indices close the session on a weak note on the back of sudden sell-off in the index heavyweights and negative global markets

Major headlines

DLF Q2 consolidated net profit dips marginally; the stock closes 4.41% lower

Ranbaxy Laboratories Q3 consolidated net profit surges 169% yoy; the stock closes lower by 3.16%

Food inflation eases to 12.3%



Indian indices

Today’s session was in the favour of bears. The Indian markets tumbled in the last leg of trade owing to sudden sell-off in the index heavyweights. The sentiments were dampened after media reports stated that the equity markets in South Korean plummeted in the last few minutes of trade following the biggest ever sale by overseas investors on the day of options expiry. The European markets turned negative, which dragged the domestic markets further.

The Nifty closed below the psychologically important levels of 6200, dragged down by oil & gas, technology, realty, financial, capital goods, telecom and FMCG companies' shares, ahead of Group of 20 (G-20) meet today.

India's food inflation softened to 12.3% for the week ended October 30, 2010 as compared to 12.85% seen in the previous week.

DLF - the largest real estate developer - dropped over 4% after posting disappointing Q2 results. Anil Dhirubhai Ambani Group (ADAG) firm Reliance Power rose over 8% on buzz that the government will soon allocate gas to the company.

The Sensex began the session 55 points higher at 20930. The Sensex hit the day’s high of 20937 in its initial trade. The index started to trim gains and slipped into the negative territory in morning session. The Sensex remained in narrow range, trading in the red for rest of the morning session. The index started to decline further in the afternoon session. In last hour of trade, sudden sell-off in index heavyweights like Reliance Industries, Tata Consultancy Services, Larsen & Toubro and ICICI Bank and weak European markets led the Sensex to hit the day’s low of 20544.

At the closing bell, the Sensex closed at 20589, lower by 287 points. The Nifty ended at 6194, down by 81 points.

Bonds and Rupee update: India’s 12-year bonds fell for a second day on speculation that the banks will sell debt to replenish cash as share sales by the nation’s companies drain funds from the financial system. India's rupee strengthened against the US dollar.

Market sentiment

The market breadth was negative as declining shares outdid the rising ones. Out of the 3,103 stocks on the BSE, 1,695 fell while 1,288 gained. Hundred and twenty stocks traded unchanged.

Sectoral and stock screening

All the 13 sectoral indices closed in the red zone. The BSE Realty was the worst performer, fell by 3.15%. Index heavyweight DLF was down by 4.41%, which dragged the realty index lower. The BSE Oil & Gas slid by 1.84%, followed by BSE TECk that declined by 1.58%. Rest of the sectors fell in the range of 0.24-1.43%.

On 'A' group stocks’ front, Reliance Power was the top performer, up by 8.89% on gas allocation buzz, followed by IndusInd Bank that surged by 3.54% and Pipavav Shipyard rose by 3.46%. Among losers, Apollo Tyres slid the most by 6.51% on weak Q2 numbers, followed by TVS Motor that fell by 5.36% and DLF declined by 4.41% on disappointing Q2 results.

Viewing volumes

ADAG firm - Reliance Power was traded the most, with over 0.88 crore shares changing hands on the BSE, followed by Indian ship builder - Pipavav Shipyard (0.81 crore shares), finance institution - IFCI (0.50 crore shares), tyre manufacturer - Apollo Tyres (0.26 crore shares) and wind turbine major - Suzlon Energy (0.24 crore shares).

Global signals

European shares reversed slim gains and turned negative, with some companies such as Telefonica falling after results.

The major Asian indices closed higher except Jakarta Composite and Kospi indices. Japan’s Nikkei index hit 4-1/2 month closing high.

The US stock index futures point to a lower opening on the Wall Street ahead of the crucial G-20 meet.

Market Outlook: Markets are looking forward to what may come out of G-20 meet. In the US, there are no major data releases tonight. In India, tomorrow we have index of industrial production (IIP) for the month of September; it is expected to come in at 6.4% as against 5.6% seen in the previous month.