Black Friday at Dalal Street

Ahead of the budget next week, for the fourth straight day in running, the markets slid without support from any major quarter. It was a free fall in most counters on the back of sustained selling pressure.

Sensex nosedived below 13,600 and Nifty slipped to 3950 mark in intra-day trade. All the BSE sector indices closed in the red. Cement, pharma and banking stocks were the worst hit.

Most market analysts attributed this fall to pre-budget jitters, inflation concerns, stretched valuations, rising interest rates and profit booking across the bourses and equities. UPA Government’s assurance that more steps would be taken to tackle inflation and price rise had no positive impact on the markets.

President’s address to both houses of parliament has hinted at Finance Minister P.Chidambaram announcing these measures in the union budget later next week.

Sensex finally closed 388.78 points below at 13,632.53. It had opened firm, at 14,071.27 but began its southward journey immediately thereafter. The benchmark index kept on touching one low after another, 13, 568.08 being the last one.

The S&P CNX Nifty lost 101.05 points to 3,938.95. The total turnover on BSE amounted to Rs 4039 crore.

The market-breadth, which reflects the overall health of the broader market, was very weak. There were 5.4 losers for every gainer on BSE. A host of stocks from the small-cap and mid-cap space were being heavily sold. Against 2,207 shares declining on BSE, just 411 advanced. Only 36 scrips remained unchanged.

Among the 30-Sensex pack, only 1 advanced while the rest declined. In NSE, there were 102 advances and 944 declines.

Among the sectoral indices, banking stocks plunged 3.42 per cent, FMCG stocks plunged 3.35 per cent, telecom stocks fell 3.22 per cent and pharma stocks were down 2.65 per cent.

The major market movers on NSE were Gail which gained 1.80 per cent to Rs 277; Tata Steel rose 0.95 per cent to Rs 459, Suzlon Energy advanced 0.75 per cent to Rs 1,048, Reliance rose 0.53 per cent to Rs 1,419.50 and GSK Pharma rose 0.53 per cent to Rs 1,165.

The major NSE losers were Oriental Bank which declined 7.10 per cent to Rs 199; Jet Airways fell 6.38 per cent to Rs 639; Bharti Airtel was down 6.34 per cent to Rs 750; Grasim fell 5.99 per cent to Rs 2,276 and ITC fell 4.96 per cent to Rs 165.80.

Atlanta Ltd plunged 10 per cent to Rs 972.70 after Sebi barred the founders and some other investors from trading in shares of the company on charges of unfair trade practices.

Bombay Rayon Fashions Ltd fell 5 per cent to Rs 192.50 after its board approved acquiring 70 per cent stake in UK-based DPJ Clothing Ltd for 1.54 million pound sterling.

Sterlite Optical Technologies declined 6.1 per cent to Rs 177.90 after receiving contracts for INR 1.5 billion from Power Grid Corporation of India.

Power Finance Corporation moved higher and was trading at Rs 113.10 on BSE, a premium over the IPO price of Rs 85. The stock debuted at Rs 104; hit a low of Rs 103.50, and a high of Rs 117. Volumes in the stock were huge, at 2.67 crore shares.

The wholesale price index rose 6.63 per cent in the 12 months to 10 February, lower than the previous week's annual increase of 6.73 per cent due to a fall in some food and textile prices, data showed on Friday (23 February).

As per provisional data, FIIs were net sellers to the tune of Rs 435 crore on Thursday (22 February 2007), the day when the Sensex lost 167 points. FIIs were net sellers to the tune of Rs 348 crore in index-based futures on the same day. They were net sellers to the tune of Rs 104 crore in individual stock futures. Nifty March futures settled at 4066.65 on Thursday, a premium of 26.65 points over the spot Nifty closing of 4,040.

Revised market lots in NSE's derivatives segment become applicable today. The lot size of the Nifty contract has been cut to 50 from 100. This may boost volumes in the derivatives segment.

US blue-chip stocks declined on Thursday, as a jump in oil prices added to worries about inflation, but a rally in chipmakers' stocks helped the Nasdaq advance late in the session to end at a six-year high.

The Dow Jones industrial average fell 52.39 points or 0.41 per cent, to end at 12,686.02, with only eight of the 30 stocks in the Dow finishing higher. The Standard & Poor's 500 Index dipped 1.25 points or 0.09 per cent, to finish at 1,456.38. The Nasdaq Composite Index rose 6.52 points or 0.26 per cent, to 2,524.94, its highest close since 15 February 2001. Earlier, the Nasdaq hit a six-year intraday high at 2, 531.42.

US crude shed 9 cents to 60.86 a barrel after jumping 88 cents overnight to its highest level since 2 January 2007.

Budget fears knock Indian shares down 2.8 pct

Indian shares dropped 2.77 percent on Friday, a fourth straight fall that saw the main index slice through key support levels as investors sold on concerns about inflation and fears of nasty surprises in next week's budget.

Selling was broad-based, with ICICI Bank, telecom Bharti Airtel, software exporter Infosys Technologies Ltd. and tobacco maker ITC leading the losses.

The main 30-issue BSE index closed 388.78 points lower at 13,632.53 points, falling through support at 14,000 and the Feb. 14 low of 13,805.36 on its way to its lowest close since Jan. 11. It lost 5.04 percent on the week.

"There is a complete lack of conviction in the market before the budget," Sejal Doshi, chief executive of Finquest Securities, said.

The Union budget will be released on Wednesday.

Twenty-nine of the index's 30 stocks fell. The index ended 7.4 percent below a record high of 14,723.88 hit on Feb. 9.

"There were some rumours in the ring that the budget may have some negative news for some of the industrial sectors. That came as a dampner," said Avinash Gorakshakar, head of research at Emkay Share & Stock Brokers Ltd.

"Inflation is also one of the biggest concerns now."

Data showed inflation for the 12 months to Feb. 10 running at 6.63 percent, only slightly lower than the previous week's rate of 6.73 percent, which was the highest in more than two years.

Bank stocks were big losers on fears inflation could see the Reserve Bank of India (RBI) extend its run of policy tightening measures.

Top lender State Bank of India fell 2.0 percent to a 4-month closing low and leading private bank ICICI Bank dropped 4.3 percent.

Cement maker ACC Ltd. fell 5.0 percent and Gujarat Ambuja Cement Ltd. ended down 3.1 percent on concerns of changes in excise duty in the budget, traders said.

Infosys fell 2.2 percent, the fourth straight fall for the index's second-most heavily weighted stock, while ITC dropped 4.6 percent on fears of an increase in duty on cigarettes.

Technical analysts said the outlook was bearish because the BSE index had fallen below last week's low and also pierced a key trend-line support.

"The crucial level of 13,800 has been broken. It is very clearly bearish. I expect it to touch 13,250-13,350 and then some buying should emerge," said Sandeep Wagle, chief technical analyst at Angel Broking.

"The momentum is very clearly visible that 13,300 is very likely, so why buy before that? And if 13,250 is broken then 12,800 is very likely."

The mood was strongly negative in the broader market, where 2,209 losers easily defeated 385 gainers on volume of 238 million shares.

The 50-issue NSE index fell 2.50 percent at 3,938.95, it lowest close since Jan 10.

Elsewhere in the region, the Colombo All-Share index fell 0.10 percent to 2,986.74 points, while the Karachi 100 index gained 0.56 percent to 11,607.84.