Bears back on Dalal Street

Sensex sheds 250 points ahead of F&O expiry.

The bears came back to Dalal Street today spoiling the bulls' party that lasted just a day. Breaking off from the recovery that took place yesterday, the Indian market once again witnessed a downfall in the final hours of trade.

Weakness in metals and sell-off in select blue-chip stocks pulled down the market, even as it struggled to ride on the encouraging rebound in some of the Asian markets.

The Sensex, which swung in an intra-day range of nearly 500 points, hit a high of 11,000 and a low of 10,505 today and finally ended with a 2.31 per cent loss at 10,573.15, down by 249.63 points. The broader 50-stock Nifty lost 2.62 per cent or 83.80 points.

Traders and investors continued unwinding positions in derivatives segment to limit losses after a huge setback in share prices over the past few days.

The overall market sentiment turned bearish on the eve of expiry of May Series derivative contracts.

Said Mitesh Shah, assistant vice president, BRICS Securities, "Fifty per cent of the positions have been liquidated owing to margin calls and distressed selling. Markets will remain affected by the expiry of derivatives, global markets and commodities prices in the short term."

According to him, the investors will now become more cautious and the market will take time to recover to the original 11,500-12,000 level as investors will have to reassess the impact of monsoons and the rise in crude oil prices and interest rates.

"Our advise to investors is be counter specific and not to not restrict oneself to market calls," he said.

Pranav Khandwala of Khandwala Securities said, "The stock market has become an operators' driven game. There is selling opportunity on every rise and traders and FIIs are pulling down the market with profit booking on every rise."

Experts expect a trend reversal in June. "The reversal in downtrend is on the horizon with banking and cement sectors marking the beginning of another rally by mid-June," Khandwala said.

Today's fall in the domestic bourses was in stark contrast to a rebound in some of the Asian markets. Key benchmark indices in Japan, South Korea, Taiwan, Singapore, and Malaysia were up by between 0.13 per cent to 1.97 per cent.

Japan's Nikkei was the top gainer with a rise of 1.97 per cent. Metals, capital goods, FMCG, PSU, IT and banking "" all sectors did well in the morning session but could not sustain the early gains to the selling pressure in the afternoon and ended in the red.

ONGC was the biggest loser among the Sensex stocks today, shedding 5.89 per cent to close at Rs 1164.75.

Only few stocks from the consumer durables and healthcare sector managed to hold on to their gains in the highly volatile afternoon trade.

The major losers among the metal stocks were Hindalco (down 3 per cent to Rs 186), Nalco (down 3 per cent to Rs 238), SAIL (down 4 per cent to Rs 74.50) and Sterlite Industries (down 3 per cent to Rs 387).

The foreign institutional investors (FIIs) were net sellers to the tune of Rs 1,598 crore in the capital markets today. In the last four trading sessions, they have pulled back over Rs 5,061 crore from Indian equities.

"The FIIs have turned negative of the Indian market and they see every rise in the market as an opportunity to sell. Also the traders continue to unwind their positions to limit losses," said a broker.

The market breadth, which remained positive till mid afternoon, turned negative in the final hour. Out of the 2,507 stocks traded on the BSE today, 1,366 stocks had declined, 1,101 stocks closed on a positive note and 40 stocks ended unchanged from their last closing levels.