The Hindu Business Line : Stocks hammered due to weak results

Mumbai, Oct. 30 The equity markets continued their losing spree for the fifth consecutive day on Friday with the benchmark index, the Sensex, closing below 16,000.

While the markets opened on a strong note due to positive global cues, weak corporate results from some index heavyweights hammered stocks down, said Mr Gaurav Dua, Head of Research, Sharekhan Ltd.

As a consequence of this volatility was high.

Indices

The Sensex fell almost 550 points from its intra-day high of 16,360 to its day’s low of 15,805. It recovered some of its losses towards the end of the trading session, but still ended the day at 15,896, dropping almost one per cent from its previous day’s close.

The broader Nifty fell by 0.82 per cent.

There was some short-covering that could have lead to a bounce-back during the second session, said Mr Dua of Sharekhan.

The fall was on the cards as the divergence between the fundamentals and valuations had become too wide. The market had to come down to be in line with the fundamentals, said Mr Jagannadham Thunuguntla, Equity Head of SMC Capitals.

According to marketmen, the disappointing corporate results of some of the blue-chip companies were the main trigger for the sell-off.

There was also some talk of hedge funds reducing their exposure in the Indian markets, said a broker.

According to Ms Anita Gandhi, Head of Institutional Business, Arihant Capital Markets, the fact that there are indications of recovery in the US markets might mean that some institutions would want to pull out money from emerging markets (including India) and invest in the US markets.

Foreign institutional investors, who were net sellers of equity for more than Rs 2,500 crore on Thursday, were net buyers for Rs 576 on Friday.

Domestic institutions too were net buyers. They purchased for Rs 592 crore, according to the data on the NSE.

Among the sectoral indices on the BSE, Oil & Gas was down 2.79 per cent, TECk retreated 1.93 per cent, Power declined 1.49 per cent, Healthcare shed 0.89 per cent, FMCG lost 0.60 per cent, IT gave away 0.49 per cent, Capital Goods declined 0.46 per cent, and PSU shed 0.44 per cent.

The rest ended the day in the green.

Retail investors were hesitant to build up positions on Friday, as there is a long weekend ahead and the markets will reopen only on Tuesday, said brokers.

In fact they booked losses, said a broker.

Many who had bought Reliance Communications at Rs 190 earlier in the week sold the stock at Rs 170 on Friday, said one broker.

Speculators in play

There is not much depth in the markets as long-term retail investors are hesitant to enter, said Mr Thunuguntla.

The past few sessions have seen active participation of intra-day traders and speculators, said some brokers.

Among the major losers on the BSE were Reliance Communications, which was down 7.37 per cent; Bharti Airtel, which lost 6.38 per cent, Reliance Infra, which shed 5.03 per cent, Tata Power, which declined 4.38 per cent; and Reliance Industries, which lost 3.62 per cent.

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