Sensex below 18K on late selloff

Today's major news

IT stocks decline as government hikes MAT

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Parenteral Drugs spurts on bonus buzz; the stock ends 8.40% higher



Global signals

The European stocks edged lower in early trades on Friday (August 27, 2010) following a slump in the US, as investors were worried about the pace of economic recovery after recent grim macroeconomic data

All the major Asian indices shut the day on a mixed note, Japanese Nikkei closed with gains of 0.95%.

The US stock index futures pointed to a slightly higher start on the Wall Street ahead of US gross domestic data (GDP) data and a major speech by Federal Reserve’s Chairman Ben Bernanke.

Indian indices:

The bears were again in action after taking a pause in the previous session. The Indian markets fell, with the benchmark index set for its biggest weekly decline in more than three months, amid concern that the US will lower its second-quarter growth estimate. The markets closed the first day of a new F&O series with huge cuts in a late trade sell-off. Midcap stocks were weak and sector-wise, realty, information technology (IT), fast moving consumer goods (FMCG) and banks ended with losses. The Sensex was dragged below 18000 owing to weak cues from the global front.

Software companies dropped after the Union Cabinet proposed a hike in the rate of minimum alternate tax on book profits to 20% from the current level of 18%. Heavyweights like ICICI Bank, Infosys Technologies and State Bank of India led decline in the Sensex.

The Sensex started the day 20 points lower at 18205. The index traded in the red all through the morning session. As the session progressed, the Sensex briefly turned positive amid volatility touching the day’s high of 18248. However, in the afternoon session, from the highest level, the index slipped into the negative zone as the European stocks opened lower. In the late trades, the index slumped further, broke the 18000 mark touching the day’s low of 17944 owing to heavy selling across the board.

At the closing bell, the Sensex shut shop at 17988, 228 points down. The Nifty closed at 5409, 69 points lower.

Bond Market Wrap Up: India’s 10-year bonds are set for a second weekly drop on speculation that the central bank will boost borrowing costs to curb inflation that has held at or above 10% since February. India’s rupee headed for a weekly loss on speculation that investors will pare holdings of emerging-market assets as the US economic recovery falters and because of month-end demand for the dollar from importers.

Market Outlook: Tonight, Wall Street will be looking at the first revision of second quarter GDP and the market reaction will depend on whether that revision takes us from 2.4% to above or below a consensus of 1.4%. Secondly, Ben Bernanke is going to give a speech tonight.

Market sentiment

The market breadth was extremely weak as declining stocks outdid the advancing ones. Of the 3,059 shares traded on the BSE, 2,074 shares declined whereas 889 shares gained. Ninety-six shares traded unchanged.

Sectoral & stock screening

All the 13 sectoral indices closed in the red except BSE Oil & Gas that managed to end with gains of 0.36%. Among losers, BSE Realty was the worst performer, down by 2.67%, followed by BSE Bankex that shed 2.07% and BSE Information Technology (IT) that declined by 1.84%.

Among 'A' group stocks, Ispat Industries gained the most, up by 4.47%, followed by Cummins India that rose by 3.03% and ONGC that advanced by 2.87%. On the flip side, Jai Corp was the major loser, down by 3.75, followed by Hindustan Copper that declined by 3.74% and Housing Development and Infrastructure that fell by 3.69%.

Viewing volumes

Leading integrated steel makers - Ispat Industries was the most traded with over 1.15 crore shares changing hands on the BSE, followed by Pharma company – Piramal Healthcare (1.02 crore shares), India's second largest developer - Unitech (0.42 crore shares), wind turbine major - Suzlon Energy (0.37 crore shares) and India's biggest basmati rice player - REI Agro (0.31 crore shares).