Metal index plummets

STOCK REPORT

The major draggers were index heavyweight Reliance Industries, which lost Rs 90 to settle at Rs 995, Bajaj Auto fell Rs 292 to Rs 2,975, Bhel by Rs 237.85 to Rs 2,087, Grasim Industries by Rs 222 to Rs 1,950.50, ACC by Rs 124 to Rs 788, Tata Consultancy by Rs 110 to Rs 1,905, Infosys Technologies by Rs 220 to Rs 3,000 and Tata Motors by Rs 94 at Rs 864 and Larsen and Toubro by Rs 197 to Rs 2,505. All the indices took a tumble, predictably led by the metals index.

The BSE Metal index lost 11.73 per cent in Thursday's trade. Oil and gas scrips also witnessed heavy selling with the BSE Oil and Gas Index registered a 7 per cent loss.

"After a period of stability and rise in the market, lot of volatility has been seen. Volatility is supposed to be an inherent part of equities but for some reason it was missing from the market, which gave an unreasonable sense of safety to investors. Going forward, the volatility is likely to continue for some time," said Kunj Bansal, CIO, Religare Securities.

BSE Auto Index closed at 5282, down by 7.24 per cent from Wednesday. Hindustan Motors got mauled on Thursday, losing 14.31 per cent to close at Rs 46.10. Escorts shed 11.74 per cent to close at Rs 93.25 and Ashok Leyland ended the day at Rs 43.50, down 10.40 per cent from Wednesday's close. The Sensex fell 6.8 per cent or 826 points - the fall in its history in terms of points.

The fall was in line with the correction that happened in the region with the Jakarta Composite Index skidding by 4.2 per cent and the Hang Seng sliding 2.1 per cent.

Foreign institutional investors continued their sell-off on Thursday getting rid of another Rs 865 crore worth of equities in the secondary market.

With this, they have sold Indian equity worth Rs 4,215 crore in the last seven days alone, nearly double the figure for the whole of last month.

Though mutual funds had, in the past, bought vigorously in troubled times, analysts were divided on whether they are likely to repeat their rescue act in case of an equally catastrophic fall in tomorrow's session.

Some even suggested that a repeat of Thursday's correction may bring value back into the overheated market.

"This is the first healthy correction after a long time, triggered by talk of tax on FII profits in India and weak global markets. If markets correct by another 10 to 15 per cent, valuations will become really attractive for long-term investors," said Nirmal Jain, CMD, India Infoline, which caters to a large clientele of small investors.

Thursday's market began on a raw note with the Sensex nearly 90 points below yesterday's close, the slide that followed was across the board, with not even one scrip on the Sensex, Nifty or the BSE 100 indices escaping unhurt.

The biggest losers were the commodity stocks with ACC, Hindalco and Tata Steel dropping by nearly 11 per cent followed by the rest of the stocks. Hero Honda sustained least damage with a 1.8 per cent loss in its value.

There was not much variation in Thursday's fall in the sectors and segments as all indices including the those on the NSE sustained 6 to 7 per cent losses, with the BSE Metal Index getting away with the least damage "� a 11.4 per cent drop.

Market breadth was extremely negative, with nearly 98.6 per cent of the 'A' group stocks and 97.3 per cent of the 'B1' stocks in the red on Thursday.