Sensex slides further

A promising start to the day was firmly belied by mid-afternoon, as investors continued to press sales at all levels.

Pharmaceuticals, metals, consumer durables and technology scrips were among the biggest losers while automobile counters recorded some gains on Tuesday. At the end of the second day of continuing losses, the Sensex lost 86 points to close at 6,222.

The breadth of the market was negative, with losers outpacing gainers 4:1. In the Sensex basket, 25 of the 30 scrips closed lower.

But with the market having lost Rs 1,15,000 crore in capitalisation since January 3, market sources are talking of the correction being overdone, and an end to the slide.

Kashyap Pujara, assistant vice-president of Sushil Finance, said, "The uwinding of long positions in the futures and options segment, coupled with hedge fund selling and profit taking, have dragged the market down almost 500 points in the past week, but we may see a relief rally soon."

Scrips of pharmaceutical companies were hit by reports that excise duty will now be loaded on the maximum retail price, adversely impacting the domestic operations of drug makers, brokers said.

Cipla was the biggest loser in the Sensex basket, falling 4.90 per cent to close at Rs 267.90, followed by Ranbaxy Labs, down 4.72 per cent to close at Rs 1,109.55 and Dr Reddy's Labs, down 3.83 per cent to Rs 763.95.

Sentiment on technology scrips, already weak, was further hammered after mid-sized software services company MphasiS BFL posted lower earnings and trimmed its outlook.

As a result, the shares of other technology companies also came under selling pressure. Infosys Technologies fell 1.16 per cent to Rs 970.95 and Wipro fell 0.63 per cent to Rs 673.40.

The metals sector continued to suffer under expectations of a slowing Chinese demand, analysts added. Hindalco fell 3.95 per cent to Rs 1252.40 and Tata Steel was down 2.47 per cent to Rs 349.25.

Larsen & Toubro was down 3.65 per cent to Rs 936.90. Tata Motors was the biggest gainer in the Sensex basket, rising 1.21 per cent to close at Rs 480.85, Bajaj Auto gained 0.92 per cent to Rs 1102.75, Maruti Udyog was up 0.87 per cent to Rs 427.45, ICICI Bank gained 0.53 per cent to Rs 350.30 and Tata Power was up 0.37 per cent to Rs 355.40.

Moving in a range of 121.07 points, the Bombay Stock Exchange Sensex hit a high of 6,329.89 and a low of 6,208.82 in intra-day trades. The Sensex finally closed at 6,222.87, down 85.67 points (1.36 per cent) from yesterday's close.

Old worries of a slowdown in foreign fund inflows and demand from China continued to bother the market, players said.

A dealer at a local brokerage said, "Metals are looking weak globally, oil prices are up, and foreign fund inflows to India have slowed down, all adding to the weak sentiment."

Some consolidation during the reporting season is expected with the next big trigger being next month's Budget. Brokers said they expected the market to be ranged in the near term.

Profit taking from some hedge funds was also seen. Foreign funds were net sellers of Indian shares worth Rs 32 crore on Monday while domestic mutual funds were net buyers to the tune of Rs 72 crore, data released by the Securities and Exchange Board of India show.

A day in the markets

• NSE tells brokers to disassociate themselves from sub-brokers who have not registered in Sebi's MAPIN database
• Sebi summons firms to testify against suspect brokers and finance ministry officials in banking scrip investigations
• Reliance buys back 3,12,000 shares on Tuesday, at an average price of Rs 529.58, for Rs 16.52 cr