Profit booking, inflation drag markets for 3rd day

The Indian markets witnessed losses for the third consecutive day owing to consistent selling pressure across the board coupled with inflation concerns.

Major headlines

Food inflation soars to 18.32%

Economy to grow by 8.8% in 2010-11: IMF

Suzlon Energy inks pact with Hindustan Zinc



Indian indices

Weakness continued on the Indian bourses for the third straight session. Consistent selling pressure across the board led the markets to witness sharp fall. The markets were seen under pressure after gaining in initial trade, with realty, capital goods, auto, consumer durables, banks, PSU companies’ shares among the major draggers. Buying in Reliance Industries, Bharti Airtel, Sun Pharma, Hindalco Industries, HDFC Bank and Tata Steel along with technology and power companies' shares limited the losses to some extent

Food inflation jumped to 18.32% for the week ended December 25, 2010 as compared to 14.44% seen in the previous week. Rate sensitive stocks remained under pressure on worries that the Reserve Bank of India may tighten interest rates to control inflation. These concerns led the markets to extend losses. The fertiliser stocks took a beating today after the government deferred decision on urea price decontrol.

The Sensex began the trade 94 points higher at 20396 and immediately hit the day’s high of 20426. The gains were short-lived as the Sensex turned negative in initial trade. The Sensex extended losses in the morning trade as selling pressure was seen in majority of the sectors. The index fell further after a spike in food inflation, hitting the day’s low of 20107 in the afternoon session. The Sensex shut the session on a weak note owing to all-round selling and inflation concerns.

The Sensex closed 116 points lower at 20185 and the Nifty fell by 32 points to close at 6048.

Market sentiment

The market breadth was weak as losing shares outpaced the rising ones over two times. Out of the 3,017 stocks traded on the BSE, 1,861 tumbled while 995 rose. Hundred and sixty-one stocks remained unchanged.

Viewing volumes

Wind turbine major - Suzlon Energy was traded the most, with over 0.78 crore shares changing hands on the BSE, followed by industrial finance company - IFCI (0.28 crore shares), steel maker - Jindal Steel (0.26 crore shares) and India’s second largest developer - Unitech (0.23 crore shares).

Sectoral & stock screening

All the 13 sectors closed lower except BSE Information Technology (IT) that rose by 0.47% and BSE TECk gained by 0.37%. BSE Realty was the biggest loser, down by 2.41%, while BSE Capital Goods (CG) lost by 1.88% and BSE Auto fell by 1.59%.

Among 'A' group stocks, top three gainers were - Jain Irrigation advanced by 3.19%, Marico gained by 3.15% and Sun Pharma rose by 2.33%. Top three losers were - Jaypee Infratech lost by 7.09%, BGR Energy Systems declined by 6.16% and National Fertilizers fell by 6.03%.

Global signals

European shares were higher, on growing confidence the economic recovery was on a stronger footing after the US employment figures pointed to a pick-up in the labour market.

The major Asian markets ended the session on a mixed note.

The US stock index futures indicate a slightly higher opening on the Wall Street.

Market Outlook: Weekly Jobless Claims will be announced in the US tonight.