Sensex turns volatile as profit booking sets in
MUMBAI: Indian markets defied expectations of continuation of bull-run as investors who were stuck holding stocks at higher levels utilised the opportunity to reduce their portfolio by booking handsome profits.
While a group of investors cashed in profits, others bought on dips sensing revival in economic growth on hopes of a stable government. This resulted in a huge volatility in early session.
Market gave a thumbs-up to the UPA’s victory in 2009 general elections. The new government is expected to carry forward economic reforms more aggressively as it will not be bogged down by the Left parties or other regional parties. Trade halted on Monday after the benchmarks surged around 20 per cent triggering to two-upper circuits for the first time ever.
“We believe investors should use this opportunity to exit from the market as we anticipate a descent to levels of 13,500–13,750. While we recommend that every dip should be used as opportunity to enter into the market, it would be prudent to book profits at 14,800–15,000 levels. For the day we are positive on the market but advice profit booking at higher levels,” said Religare Securities report.
At 10:45 am, Bombay Stock Exchange’s Sensex was at 14386.81, up 102.60 points or 0.72 per cent. The 30-share index witnessed sharp volatility of over 900 points in early trade. The index touched an intra-day high of 14757.82 and low of 13834.13.
National Stock Exchange’s Nifty was at 4328.80, up 5.65 points or 0.13 per cent. The index swung 300 points early in the day between intra-day high of 4464.90 and low of 4167.65.
“Technically rally seems to be over stretched at this point and need some consolidation however we may observe euphoria to continue till major shorts in market get covered. Midcaps and smallcaps too failed to participate in the rally clearly visible from market data. Only 846 stocks witnessed trades on BSE. In short term, 4680-4700 may act as mild hurdle on higher side with reversal placed far lower around levels of 3700-3750 for Nifty,” said Reliance Money report.
BSE Midcap Index was up 0.76 per cent and BSE Smallcap Index gained 0.56 per cent. Amongst the sectoral indices, BSE Realty Index was up 5.76 per cent, BSE Capital Goods Index gained 5.61 per cent and BSE Bankex moved 4.87 per cent higher.
BSE IT Index fell 7.85 per cent, BSE FMCG Index declined 4.42 per cent and BSE Healthcare Index was down 1.93 per cent.
Mahindra & Mahindra (14.70%), Maruti Suzuki (10.79%), Larsen & Toubro (10.60%), State Bank of India (8.01%) and Reliance Communications (6.23%) were the top Sensex gainers.
Infosys Technologies (-8.75%), TCS (-6.08%), Wipro (-5.37%), ITC (-4.88%) and Hindustan Unilever (-4.67%) were amongst the losers.
Shares of Larsen & Toubro were in the limelight after the engineering major ’s subsidiary in Oman bagged orders worth Rs 518.2 crore. The project has to be completed within 15 months.
Shares of Mahindra & Mahindra were in the limelight Tuesday after the company’s employee union at the Nashik plant withdrew its 14-day strike. Following the withdrawal, production has resumed in the plant, the company said in a statement to the BSE.
Market breadth was positive on the BSE with 1469 advances and 720 declines.
Meanwhile, US stocks ended higher on Monday as encouraging results from home improvement retailer Lowe’s Cos Inc triggered a broad-based buying on expectations that the long-drawn recession is easing and consumer spending is recovering back to normalcy.
The Dow Jones Industrial Average advanced 235.44 points, or 2.85 per cent, to 8,504.08., the Standard& Poor’s 500 Index added 26.83 points, or 3.04 per cent, to 909.71 and the Nasdaq Composite Index surged 52.22 points, or 3.11 percent, to 1,732.36.
Stocks across Asia were on the rise as well tracking cues from Wall Street and as oil prices picked up momentum. The Nikkei was trading 2.82 per cent higher, Hang Seng advanced 3.03 per cent and Straits Times advanced 3.58 per cent.
Source / courtesy: ET