Downsides in IT, auto stocks prove a drag on indices

Disappointing results announced by Tata Motors, SBI and L&T also contributed to the decline.

Markets continued to be under pressure for the third consecutive day with the benchmark Sensex going down 112.85 points to close at 7685.64.

While FII selling is said to be the primary reason for this downfall, some brokers and dealers also attribute a part of it to the disappointing Q2 results announced by some leading companies like Tata Motors, SBI and L&T and the general weak trend observed in the global markets.

The decline was led by downsides in the IT and auto sector stocks, said dealers. The expiry of October futures contracts on Thursday (27 October 2005) did not see sufficient rollover of positions, said dealers, which indicated bearishness in the market.

While the benchmark BSE Sensex ended the day 112.85 points lower at 7685.64, its lowest level in two months, the 50-share Nifty ended the day at 2316.05, down 36.85 points.

"The continuing reverse flow of funds from emerging markets has had a negative impact on the market. Further, the fact that a significant part of the long trading positions are shifting to 'weaker-hands' is only adding to the problems", says Rahul Rege, head-sales and business development, Sharekhan.

"However, we believe this is an ideal time to accumulate fundamentally sound investment ideas rather than predicting an index bottom," he added.

Analysts noted that emerging markets are witnessing an outflow of foreign institutional investments since the past few days. The outflow is said be because of prospects of a further rise in US interest rates. In the month of October 2005, FIIs have sold shares worth Rs 3,476.20 crore.

Among sectoral indices, the BSE Metal Index was the worst hit. The index fell 3.33 per cent to 5390.86 followed by the BSE Auto Index and BSE Small Cap which fell 2.64 per cent and 2.53 per cent respectively.

Market breadth continued to be weak. 1,888 stocks declined on BSE as compared to 528 stocks that rose. 28 scrips were unchanged. Declines outnumbered advances in the ratio of 4.4:1. Turnover on BSE was lower on Friday at Rs 2,572.43 crore compared to Thursday's Rs 2,792.69 crore. 
 

UNITED WE FALL
Date	3 Oct '05	28 Oct '05	%chg
Ranbaxy Labs	500.55	351.95	-29.69
Tata Steel	426.05	330.95	-22.32
Hindalco	151.55	118.05	-22.10
Tata Power	481.40	390.15	-18.96
ICICI Bank	593.29	485.15	-18.23
Tata Motors	553.25	460.80	-16.71
Grasim Ind	1328.80	1106.80	-16.71
ITC	136.65	115.25	-15.66
HLL	184.85	157.40	-14.85
SBI	945.05	810.75	-14.21
ONGC	1069.84	918.10	-14.18
Reliance Energy	585.00	503.45	-13.94
Guj Amb Cem	78.55	67.70	-13.81

While FMCG major Hindustan Lever, Cipla, HDFC Bank, Ranbaxy, Hindalco, Bhel, HDFC, and ONGC were among the big losers,

Bharti Tele-Ventures spurted after British telecom firm Vodafone Group Plc acquired 10 per cent stake in the company.

Despite the weak trends, mid-cap and small-cap scrips like Indiabulls, Appolo Hospitals, Sun Pharma, McDowell, Jaiprakash Associates, Cummins India, PSL, Biocon, Tube Investments, NIIT, Apollo Hospitals, Elgi Equipment, Amtek India, Gammon India, Balaji Telefilms and Kesoram Industries reported gains.

"The market had gone ahead of fundamentals and is currently undergoing some correction. The fair value of the Sensex could be at around 7600.The long term outlook is still bright", says Nilesh Shah, chief investment officer, Prudential ICICI Mutual Fund.