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Profit Taking Drags Indian Shares Sharply Lower

Indian shares tumbled on Wednesday as investors took some profits off the table after the recent sharp upmove. Asian markets turned in a mixed performance and European shares were subdued in early trading on pessimism about Greece's future, prompting investors to square off positions ahead of February series F&P expiry slated for tomorrow.

With selling accelerating in the last hour of trade, the benchmark 30-share Sensex finished the session down 283 points or 1.54 percent at 18,145. High-beta realty, consumer durable, metal and banking stocks paced the declines, while IT stocks ended modestly higher.

HDFC Bank, ONGC, Infosys, ITC, Sun Pharma and TCS bucked the downward trend to end up between 0.1 percent and 1.5 percent. The broader Nifty index plunged 102 points or 1.82 percent to 5,505. Second-line stocks underperformed, with BSE mid-cap and small-cap indexes declining over 3 percent each after recent sharp gains.

SBI plunged almost 8 percent on concerns about its asset quality after reports emerged that the state-run lender threw in a lifeline of around Rs.1,200 crore to the cash-strapped Kingfisher to help defreeze the company's bank accounts. Private sector lender ICICI Bank tumbled 3.4 percent and mortgage lender HDFC fell 2.1 percent. Shares of debt-laden Kingfisher Airlines ended down 6.5 percent, reversing initial gains.

Copper producer Sterlite Industries slumped 6.6 percent after its parent company issued a clarification regarding a potential group restructuring. "Vedanta's stated strategy is to simplify and consolidate its corporate structure. Management reviews options to deliver this strategy on an ongoing basic and will update the market as appropriate," the company said.

Property developer DLF plummeted 7.7 percent, metal stocks such as Tata Steel, Hindalco and Jindal Steel fell 4-5 percent, telecom major Bharti Airtel lost 3.3 percent and utility vehicles manufacturer Mahindra & Mahindra shed 2.4 percent.

Infrastructure stocks came under significant pressure, with Larsen & Toubro, IVRCL, Pratibha Industries and GMR Infrastructure losing 2-12 percent. ACC and Ambuja Cements fell 3-4 percent after corporate affairs minister Veerappa Moily said a probe on cartelization in the cement sector is under review.

Market heavyweight Reliance Industries lost a percent after the company said it has formed a $450 million joint venture with Russian petrochemical company Sibur to produce 100,000 metric tonnes of butyl rubber a year in Jamnagar.

Raj Television Network rallied 3.3 percent after the company entered into an agreement with state-run Arasu Cable. IL&FS Investment Managers climbed 3.4 percent on reports it is in advanced talks to buy out Hershey stake in its joint venture with the Godrej group.

BPCL rose almost 2 percent after Anglo-Dutch oil major Royal Dutch Shell made a £992.4 million cash offer to buy Cove Energy, which has a 8.5 percent stake in Mozambique block.

In economic news, Prime Minister's Economic Council today said that the Indian economy will likely grow between 7.5 percent and 8 percent during 2012-13.

"If the world environment is favorable, we will be able to achieve high growth rate," Dr C. Rangarajan, Chairman, PMEAC, said. The official agency has revised the growth estimate for the current fiscal upward to 7.1 percent and said that inflation will hover around 6.5 percent at the end of March.

by RTT Staff Writer

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