Markets slump in the last leg of trade. Selling pressure in index heavyweights like TCS, ONGC, Reliance Industries, Bharti Airtel and HDFC has dragged the benchmark down by 70 points. Sensex is trading near day's low at 20,624, down 245 points, the S&P CNX Nifty has fallen 73 points to 6203.
The bourses have been witnessing selling pressure owing to the Power Grid follow on public offer. "Many frontline counters are seeing profit booking and money is getting shifted towards fresh issues," Ashish Chaturmohta, Vice President-Derivates, from Angel Broking said.
The Inflation data also played a spoil sport, the food price index surged to 12.3% and fuel price index spiked to 10.7% year on year. The whole sale price index was up 8.6% in September versus annual rise of 8.5%.
Other markets across Asia also ended on a mixed note, Japan's Nikkei Stock Average was up 0.3%, South Korea's Kospi Composite was up 0.2%, Hong Kong's Hang Seng Index rose 0.8%, and China's Shanghai Composite was up 1%. Although consumer price index rose 4.4% in China, other data on fixed asset investments indicated that the Chinese economy was on a firm ground.
Back in India, quarterly earnings continued to determine the direction of the stock. Ranbaxy soured to six year high of Rs 625 (UP 3.5%) after consolidated net profit for the third quarter more than doubled to Rs 308 cr. The stock pared all gains and plunged 3.6% to Rs 582 due to profit booking. Also DLF dipped 4.3% to Rs 347 after the net profit dropped 5% to Rs 418 cr.
Bharti Airtel continued its losing streak for the second day, the stock fell 3.2% to Rs 317. Analysts said 3G roll out can be used as an opportunity to exit from the telecom stocks. Rishi Nathany, Director, Touchstone Wealth Planners said, "we continue to be negative on the telecom sector, there could be some short-term pullbacks in this sector due to the 3G rollout, which could be used as an opportunity to exit."
Top losers on the benchmark besides DLF and Bharti Airtel were TCS (down 2.5%), ONGC (down 2.3%), Reliance Industries and HDFC, down 1.9% each.
On the other hand, Reliance Power was unperturbed as shares hit a jackpot; the stock surged 8% to Rs 187 on reports that the company signed a pact with the US's General Electric Co. (GE) worth Rs 10,000 crore to implement a 2400 mega-watt power plant. Reliance power has been an actively traded call on the options chart. Ashish Chaturmohto said, "after a long time stock has seen buying interest, open interest has risen by 4% on the long side suggesting stock can test 195-200 levels in coming days." Among other Sensex gainers, Hindalco soured 3.7% after RBS upgraded the stock to buy.
Only three components on the Sensex were trading in the green. other than Hindalco, Tata Power (up 1.4%) and Mahindra and Mahindra (up 0.9%).
While the markets are taking a breather for the past few sessions, analaysts continue to be bullish on the benchmark in the long run.
Sarabjit Kour Nangra, Vice President-Research, Angel Broking said, "At current juncture we don’t think that the Indian markets have
run-up ahead of their fundamentals. We expect Sensex to be around 21,600 levels by March."