Market volatile on rising Re

A day after the Sensex crossed the 16,000 mark, stocks remained extremely volatile on Thursday, following weak European markets and the rising rupee, which pulled down IT stocks, including those of bellwether Infosys Technologies and Tata Consultancy Services.

The Sensex briefly touched an all-time high of 16,415.88 points in mid-session, before profit booking and concerns on export-oriented sectors such as IT and textiles, and to some extend pharmaceuticals, wiped off the early gains.

The Sensex ended the day at 16,347.95 points, up 25.20, or 0.15 per cent from yesterday. The broader S&P CNX Nifty ended at 4,747.55 points, up 15.2 points or 0.32 per cent.

The FTSE 100 opened lower by around 55 points or 0.85 per cent as the appreciating euro vis-a-vis the dollar crippled European exporters.

Moreover, liquidity concerns still remained in Europe with Northern Rock tumbling by 30 per cent after the UK Treasury said it will not guarantee deposits set up from on Thursday at the lender.

Most currencies, including the euro and the rupee, have rallied sharply against the dollar after the US Federal Reserve cut interest rates on September 18 by 50 basis points.

Export-oriented counters, including IT and pharma, have been the worst hit with the rupee breaching the Rs 40 mark on Thursday and closing at its all-time high of Rs 39.89/90 against the dollar.

"After the dramatic rise yesterday, there is bound to be some profit-booking. Institutions that have been buying stocks in the last few months turned net sellers. Massive selling was seen at technology counters. In fact, most export-oriented sectors have taken a hit," said Pankaj Namdharani, head-equities, SPA Securities.

The BSE IT index (down to 4390.75 points or 2.24 per cent) was the worst performing index on Thursday, with IT heavyweights, Wipro (down to Rs 433.50 a share or 3.27 per cent), Infosys Technologies (down to Rs 1,799.75 a share or 2.89 per cent), TCS (down to Rs 1,000.80 a share or 2.12 per cent) and Satyam Computers (down to Rs 421.30 a share or 1.91 per cent) pulled the Sensex down.

The BSE Realty index (up to 9,044.40 points or 6.85 per cent) gained rapidly as property developer Unitech (up to Rs 329.15 a share or 12.43 per cent) touched an all-time high market capitalisation of Rs 54,530 crore on the back of its inclusion in the key BSE and NSE indices.

Sugar stocks like Bajaj Hindusthan (down 4.36 per cent), Triveni Engineering and Industries (down 4.69 per cent) and others have taken a beating following Agriculture Minister Sharad Pawar's statement, giving more subsidies to an already heavily subsidised sugar industry yesterday.

Bank stocks such as ICICI Bank (down 0.36 per cent), Indian Overseas Bank (down 2.07 per cent), Bank of Baroda (down 2.27 per cent) pulled down the Bankex (down to 8688.68 points or 0.03 per cent). Reports that ICICI Bank's credit offtake was down by about 20 per cent pushed it into red territory, say market observers.

Market participants feel that an interest rate cut in India is imminent at this time. "With interest rates coming down across the world (except China), the expectations of rate cut in India is also increasing. This makes even the short-term outlook positive. Banking and financial services also look great with interest rates coming down across the globe. With the US and European interest rates coming down we should see increasing FII participation," said Sudip Bandyopadhyay,director and CEO, Reliance Money.