Relentless selling drags Sensex 238 pts lower

The Sensex fell for the second straight day and closes 238 points down owing to heavy sell-off across the sectors

Major headlines

Rigging in Ruchi Soya, KS Oil, IRB Infra suspected

Local car sales up by 21%, bikes 16% in November

HCL Technologies inks pact with Ricardo Electro; the stock ends 0.68% higher



Indian indices

Indian markets fell for the second consecutive day and the most in two weeks as government widened its probe into the issuing of mobile-phone licenses. The markets tried to pullback in late trade but the fall was too steep to get any noticeable upmove. There were no positive triggers seen that could provide some sense of relief to the downturn. Investors too remained cautious in the wake of a spate of scams and other bad news involving alleged stock manipulation.

Reliance Communications, the nation's second-largest mobile-phone operator, lost by 3.5% as federal investigators searched homes of A Raja, who was Telecommunications Minister in 2008 when the government auditor said licenses were sold at below market rates. Sterlite Industries (India), the biggest copper producer, declined with metal prices. Among Mid-cap indices, Ruchi Soya industries, KS Oil and IRB Infrastructure down by 27.07%, 14.69% and 9.42% respectively on suspected price manipulation.

The Sensex began the session 61 points higher at 19874 and hit the day's high of 19875 in initial trade. The index slipped from the day’s high and traded lower throughout the morning session. The Sensex extended losses and remained weak in the afternoon session, hitting the day's low of 19611 owing to negative European markets and heavy selling across the sectors.

At closing, the Sensex closed at 19696, down 238 points and the Nifty shut 73 points lower, at 5904.

Bond & Rupee update: India's 10-year bonds gained for a second day on speculation the central bank's buyback of Rs120 billion ($2.7 billion) of debt tomorrow will spur demand
for government securities. India's rupee fell, snapping a six-day winning streak, as a move by the US to extend tax cuts to boost growth in the world's largest economy reduced the allure of higher-yielding currencies.

Market sentiment

The market breadth was weak as losing stocks outpaced the gaining ones over four times. Of the 3,041 stocks on the BSE, 2,319 declined while 595 rose. Hundred and twenty-seven stocks remained unchanged.

Sectoral and stock screening

All the 13 sectoral indices ended in the negative territory. BSE Consumer Durables (CD) was the biggest loser, down by 2.98%, followed by BSE Realty, BSE Bankex and BSE Metal slid over 2% each. Rest of the sectors fell in the range of 0.40-1.11%.

Among 'A' group stocks, Hindustan Petroleum Corporation posted gains of 3.38%, followed by Castrol India up by 3.08% and Procter & Gamble rose by 2.78%. On the flip side, IRB Infrastructure plunged by 9.42% on reports of price manipulation in the company, followed by Shree Renuka Sugars down by 7.54% and Allahabad Bank declined by 7%.

Viewing volumes

India’s second largest developer - Unitech was the most traded, with over 0.59 crore shares changing hands on the BSE, followed by industrial finance company - IFCI (0.42 crore shares), Indian ship builder - Pipavav Shipyard (0.30 crore shares), sugar major - Shree Renuka Sugar (0.27 crore shares) and infrastructure major - IRB Infrastructure (0.23 crore shares).

Global signals

European shares turned positive erasing its initial losses as investors focused on the prospects for further recovery, shifting their attention from euro zone debt worries.

The major Asian indices closed mixed. Indices like Shanghai Composite, Hang Seng and Kospi ended in the negative zone while Nikkei, Jakarta Composite and Straits Times closed in the positive zone.

The US stock futures indicate to a slightly lower opening on the Wall Street.

Market Outlook: No major data in the US tonight.