Markets hit 5-month low on extreme sell-off

Selling activity again took the lead on the first session of February month dragging the markets to five-month low. Realty down over 4%.

Major headlines

December exports up 36.4% at $22.5 billion

Delta Corp slumps on Goa govt order

Unitech against Morgan Stanley; stock falls



Indian indices

The start of the February month also did not show some respite, as extreme sell-off across the board led the Indian markets to hit five-month lows. Panic among the investors owing to selling by the foreign funds dragged the Sensex below a psychologically important level of 18000 - for the first time since August 31, 2010. However, the Nifty managed to hold strong at the 5400-mark, which seems like a major support for the time being. This was the fifth consecutive session where huge sell-off dragged markets to end in deep red.

Auto stocks fell on concerns rising costs will trim corporate earnings and curb demand. Oil & Gas stocks tumbled after crude prices hit two-year high. The markets ignored the positive global cues along with healthy auto sales numbers and rise in India’s exports.

Heavyweight Reliance Industries tumbled below Rs900, down by 3%. The nation’s biggest truckmaker Tata Motors fell over 6%, most in eight months. Jindal Steel and Bharat Petroleum went down over 4% each.

In Midcap space, Apollo Tyres, Novartis India, Sadbhav Engg, Uttam Galva and Hathway Cable went up 3.6-5%. However, Jain Irrigation plunged 17.73%. SpiceJet, Escorts, GVK Power and Kingfisher Airlines fell 7.5-11%.

In Smallcap space, Ruchi infra surged 14.51%. Nagarjuna Agri, OCL India, Chromatic India and Kanani Industries gained 5-9%. However, Gemini Communications, Surana Industries, Delta Corp, Lok Housing and Relaxo Footwear slipped 8-10%.

The Sensex started the session 97 points higher at 18425 taking lead from the positive global cues and immediately hit the day’s high of 18452. The index failed to hold gains and turned negative in initial trade. The index continued to trade weak for the rest of the session, extending losses owing to relentless selling pressure in all the sectors. In late trade, the Sensex hit the day’s low of 17982.

The Sensex tanked 306 points to close at 18022 and the Nifty fell 89 points to settle at 5417.

Bond update: India’s most-traded 11-year bonds fell after a cash squeeze in the banking system pushed up overnight rates, making it more expensive to buy debt with borrowed funds. Yields increased to the highest level in a week as the call money rate, at which lenders borrow from each other, rose to 7% yesterday and was unchanged today, compared with an average of 6.6% last week.

Market sentiment

The market breadth was extremely weak as declining shares outdid rising ones almost twice. Out of the 2,992 stocks traded on the BSE, 1,916 slipped while 922 surged. Whereas, 154 stocks traded unchanged.

Sectoral & stock screening

All the 13 sectoral indices ended in the negative territory. BSE Realty continued its downtrend and slid by 4.04%, followed by BSE Auto down by 2.83% and BSE Capital Goods (CG) fell by 2.49%. Rest of the indices shut lower in the range of 0.80-2.10%.

Among 'A' group stocks, top three gainers - Apollo Tyres rose by 4.28%, Fortis Healthcare jumped 3.63% and National Aluminum surged 2.09%. Top three losers - Jain Irrigation tumbled by 17.73%, Unitech slid by 10.59% and Jet Airways declined by 8.99%.

Viewing volumes

India’s second largest developer - Unitech was traded the most with over 1.75 crore shares changing hands on the BSE, followed by industrial finance company - IFCI (0.38 crore shares), wind turbine major - Suzlon Energy (0.34 crore shares), Jain Irrigation (0.34 crore shares) and Jaypee Group firm - Jaiprakash Associates (0.31 crore shares).

Global signals

European shares bounced back, with investors’ confidence bolstered by a bright outlook for the economy and corporate earnings

The major Asian markets ended the session in the positive territory. Jakarta Composite ended higher by nearly 1%.

The US stock index futures point to a higher opening on the Wall Street ahead of ISM Manufacturing data for the month of January.

Market outlook: In the US, ISM Manufacturing PMI data for January will be out.