Telecom FDI imbroglio spurs selloff

STOCKS REPORT

The Cabinet decision to defer hike in foreign investment limit in telecom sector triggered massive selling across the board on Thursday by select index-based hedge funds.

In an extremely volatile trading session, the 30-share Bombay Stock Exchange (BSE) Sensex plunged 130.20 points or 2.1 per cent to settle at 6,063.91.

Also, concerns that net foreign inflows in January could fall short of market expectations triggered a bout of profit-taking.

"It appears that foreign inflows will be lower than what was initially anticipated," said a dealer with a local brokerage house.

Foreign funds sold local shares for a net $9.1 million on Tuesday "" the first net sales by overseas investors this year.

Most of the selling on the market began during the last half an hour of trading. During the day, the Sensex moved in an intra-day range of 203.51 points, between a high of 6,248.81 and low of 6,045.30.

On the National Stock Exchange (NSE), the S&P CNX Nifty index too shed 37.70 points or 1.9 per cent to close at 1,944.45. Losers outpaced gainers by about two to one in brisk trades.

Thursday's decline was led by old economy companies, which had also spearheaded the recent rally. Cement major Gujarat Ambuja Cements lost 4.00 per cent to Rs 313.55 on massive fund-based selling. The share price of Associated Cement Companies too eased down around 4.00 per cent to Rs 259.

Cellular services provider Bharti Tele-Ventures fell 1.60 per cent to Rs 119.90. The BTVL stock had surged to a 52-week high of Rs 130 ahead of the Cabinet meeting.

Elsewhere, private sector banks surged after the government hiked the FDI limit in private banks to 74 per cent from 49 per cent.

UTI Bank soared 14.00 per cent to Rs 162.55, Centurion Bank gained 8.00 per cent to Rs 22.80, and HDFC Bank was up 4.40 per cent to Rs 384.10.

Index heavyweight Reliance Industries eased down 3.40 per cent to Rs 576.90, off from day's high of Rs 603.25 in intraday trades, on institutional selling pressure.

The stock touched a substantial weightage of about 13.8 per cent on the Sensex, and its movements have large implications on the benchmark index.

Elsewhere, Reliance Energy plunged 5.00 per cent to Rs 544.40. BHEL lost 5.00 per cent to Rs 561.70, while Tata Power shed 3.80 per cent to Rs 406.

Meanwhile, auto stocks too reeled under selling pressure. Mahindra & Mahindra lost 4 per cent to Rs 420, Ashok Leyland shed 3.8 per cent to Rs 296, Tata Motors dropped 3.7 per cent to Rs 489, while Bajaj Auto declined by 3 per cent to Rs 1,046.30. Hero Honda tumbled 4.4 per cent to Rs 456 effected a sharp reversal after profit taking emerged in the counter.