Tuesday, February 17, 2009

Sensex nudges 9000 as weakness persists

MUMBAI: Indian equities fell sharply for a second consecutive session Tuesday, wiping out the gains recorded in the five-day run ahead of the interim budget. But with vote-on-account offering little to corporate India, the across-the-board selloff sparked Monday spilled over to today as well. Global markets were also under pressure on account of renewed financial concerns, which further affected sentiment.

Another worry is a likely downgrade of India's sovereign by rating agencies over the government’s deteriorating finances. In the interim budget, acting Finance Minister Pranab Mukherjee revised the Centre's fiscal deficit to 6 per cent of GDP for the current fiscal against earlier projection of 2.5 per cent.

Standard & Poor's has said it would monitor fiscal deficit among other factors to review India's sovereign ratings which currently stands at the lowest investment grade. If India's rating is downgraded, it will significantly raise the cost of borrowing for Indian firms in global markets.

At close today, National Stock Exchange's Nifty was at 2770.50, down 78 points or 2.74 per cent. The broader index recovered from an intra-day low of 2757.30. Bombay Stock Exchange's Sensex ended at 9,035, down 270.45 points or 2.91 per cent. The index broke the crucial support of 9000 to hit an intra-day low of 8994.34 but crawled back as some buying emerged at lower levels.

"The market is moving sideways in a narrow range of 2750-2950 (on Nifty) for the past few sessions. The index needs to successfully break out on either side for a decisive trend. The global trend continues to be negative and the Dow has breached its crucial support of 8000. With the budget now out of the way, the Indian market will have to rely on the global markets. However, there are no positive signals emerging overseas and some more pain is likely," said Neera Jain, chief technical analyst, CRNIndia.com.

Significant losses in Tata Steel (-6.74%), ICICI Bank (-5.69%), DLF (-5.19%), Mahindra & Mahindra (-5.01%) and Hindalco Industries (-4.74%) dragged the key indices lower. ITC, which ended with fractional gains, was the lone gainer in the 30-share index.

There was no respite for the midcap space either. The broad-based selloff shaved 2.31 per cent off the BSE Midcap Index and 2.35 per cent from the BSE Smallcap Index.

Sectorwise, realty was the worst hit, followed by consumer durables, banking and the metal space. Market breadth on BSE remained extremely weak through the day with 1,722 declines outnumbering 682 advances.

Meanwhile, world stocks fell to a two-week low as concerns about economy and corporate profits intensified. Among European markets, the FTSE 100 lost 1.49 per cent, DAX 30 fell 1.49 per cent and CAC 40 was down 1.76 per cent. In the Asia-Pacific, the Nikkei dropped 1.5 per cent, Hang Seng tumbled 3.79 per cent, Straits Times declined 2.5 per cent and S&P/ASX was down 1.5 per cent.

Soruce: http://sports.timesofindia.indiatimes.com

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