Sensex closes at one-month low, down 468 points

Concerns over interest rate hike, weak global peers coupled with selling pressure from FIIs weighed on the sentiments, with the Sensex closing at one-month low, down 468 points.

Major headlines

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Indian indices

It was a bearish start to the second week of 2011, with the Indian markets falling to close at a one-month low. The benchmark indices witnessed its longest losing streak in eight months, amid concerns rising prices will prompt the central bank to tighten monetary policy this month. The markets lost substantially today with selling pressure coming primarily from the foreign institutional investors (FIIs). Nagging worries over the euro zone debt crisis also weighed on the sentiments globally. Realty, capital goods, consumer durables and banking sectors remained the worst performers, though none of the sectors could manage to remain in the green.

Among frontliners, HDFC Bank, Hindalco Industries, Bharat Heavy Electricals, Housing Development Finance Corporation, Jaiprakash Associates and Bajaj Auto were down 4-5%. Among Mid-cap stocks, Gujarat NRE Coke, ARSS Infraprojects, Sintex Industries, Shree Renuka Sugars declined 6-8%.

The Sensex opened higher by 22 points at 19714 and quickly hit the day’s high of 19720. The index slipped from its highest level in initial trade and traded in the red amid volatility. Weak Asian cues and all-round selling dampened the sentiments, which led the Sensex to trade with losses in the morning session. The index traded with heavy losses in the afternoon session dragged by the negative European markets. Aggressive selling across the board and also in index heavyweights led the Sensex to hit the day’s low of 19158 in late trade.

The Sensex closed at 19224, down by 468 points and the Nifty shut 142 points lower at 5763.

Bond update: India’s 10-year bonds dropped for a third day on concern the central bank may raise interest rates this month to cool inflation. The yield on the benchmark 7.80% bond due in May 2020 rose 2 basis points to 8.22% versus 8.20% on January 07, 2011.

Rupee update: India’s rupee declined for a second day on speculation foreign funds were holding off from investing in the nation’s equities at the start of the year.

Market sentiment

The market breadth was extremely weak as the losing shares outnumbered the advancing ones over three times. Out of the 3,003 stocks traded on the BSE, 2,233 plunged while 648 gained. Hundred and twenty-Two stocks traded unchanged.

Sectoral & stock screening

All the sectors ended in the red. BSE Realty tumbled the most by 3.55%, followed by BSE Capital Goods (CG), BSE Consumer Durables (CD) and BSE Bankex fell by 3.52%, 3.26% and 3% respectively. Rest of the indices ended lower in the range of 0.17-2.99%.

All the Sensex stocks closed lower, barring Infosys Technologies and Bharti Airtel. HDFC Bank was the worst performer declining by 5%, followed by Bharat Heavy Electricals down by 4.76%, Hindalco Industries and Housing Development Finance Corporation dropped by 4.44% each.

Viewing volumes

Industrial finance company - IFCI was traded the most, with over 0.58 crore shares changing hands on the BSE, followed by wind turbine major - Suzlon Energy (0.48 crore shares), Jaypee Group entity- Jaiprakash Associates (0.26 crore shares), construction firm - Hindustan Construction Company (0.26 crore shares) and sugar major - Shree Renuka Sugars (0.21 crore shares).

Global signals

European shares fell for a second straight session on caution ahead of the start of the earnings season and on lingering worries about the euro zone debt crisis.

All the major Asian markets ended the session in the negative territory. Jakarta Composite was the worst performer, down by 4.21%. Japan’s Nikkei index was closed today.

The US stock index futures pointed to a lower opening on the Wall Street.

Market outlook: There is no major data in the US tonight.