Sensex plunges 2%; metal scrips melt

STOCK REPORT

Key indices fell over 2 per cent on Thursday, weighed down by weakness in metal, information technology and bank shares. Dealers said the weakness in the global markets was a key reason for the fall.

Steel Authority of India was the biggest loser among frontline shares, shedding 5 per cent. Oil marketing shares rose across the board as crude oil prices fell further.

The Bombay Stock Exchange's 30-share Sensex ended at 8528.70, down 195.77 points, or 2.2 per cent, from Wednesday. The index had touched an intra-day low of 8508.43.

The National Stock Exchange's 50-share Nifty closed at 2579.15, down 65.25 points, or 2.5 per cent. It had registered an intra-day low of 2571.30.

Other major Asian markets also registered sharp losses, with Japan's Nikkei down 2.4 per cent. Hong Kong's Hang Seng and South Korea's Kospi shed 2 per cent each. Singapore's Straits Times Index was down 1.6 per cent. Taiwan's Taiex registered a minor loss, down 0.6 per cent.

Traded turnover on both exchanges was slightly over Rs 10 billion, compared with around Rs 96 billion on Wednesday.

On the BSE, retreating shares swamped gainers by 1,930:570.

Around 82 per cent of the large-cap shares fell, while 78 per cent of the mid-caps closed lower. Bharat Petroleum Corp was the biggest gainer in the Nifty, up 2 per cent.

Dr Reddy's Laboratories, Ranbaxy Laboratories, and Hindustan Petroleum Corp. were up 1-1.5 per cent, while Oriental Bank of Commerce ended marginally higher.

Among non-Nifty oil marketing companies, Indian Oil Corp was up 4 per cent and IBP & Co up 2 per cent. Major losers included HCL Technologies, ICICI Bank, Tata Steel, and National Aluminium Co, down 5-5.5 per cent.

Earlier this week, investment bank DSP Merrill Lynch had downgraded the Tata Steel stock to 'neutral', expecting earnings to fall 14 per cent in 2006-07 due to anticipated weakening of steel prices.

"We believe China's rapidly rising production will more than offset production cuts in the rest of the world. We expect China to be a net exporter of steel next year, leading to higher steel supply," the investment bank said in a note to its clients.

Aluminium shares were also down, despite aluminium prices on the London Metal Exchange showing a firm trend. National Aluminium Co fell 5 per cent, and Hindalco Industries shed 2 per cent.

Zee Telefilms, Mahindra & Mahindra, Wipro, Reliance Energy, Bharat Heavy Electricals, Tata Power, Oil and Natural Gas Corp., Hindustan Lever, and Tata Consultancy Services were down 3-4 per cent.

Among second-rung indices, CNX Bank Index was down nearly 3 per cent to 4465.25 points. The CNX IT Index was down 2.3 per cent to 3350.20. The CNX Midcap Index ended 1.6 per cent down at 3828.80.

Indiabulls Financial Services was the biggest loser, down nearly 8 per cent. The company had been barred from trading in Eltrol shares by Securities and Exchange Board of India on Wednesday. Glenmark Pharmaceuticals, up 4.7 per cent, was the biggest gainer.

"The markets reacted to the weakness in other global markets. There was also hectic selling pressure in key stocks such as Reliance Industries and Tata Steel, which dragged the markets down gradually," said Deepak Shah, assistant vice-president, Pranav Securities.

Shiv Kumar Gupta, dealer, Jet Age Securities, also attributed the sharp fall on the bourses to the weakness in global markets. "Today, there has been a global correction across the world and hence, the trend was reflected here too," he said.