Sensex slips on profit booking

STOCK REPORT

Extended profit selling in select heavyweights pushed the key indices around 1 per cent lower, for the second straight session.

The unreasonable pace of the rally to the 30-share Sensex's 11000-mark on Tuesday and subsequent concerns over pricey valuations worked in favour of the bears, dealers said.

The Sensex closed at 10841.35, down 63.85 points or 0.6 per cent from Tuesday. During the day, it touched a high of 10935.09 and a low of 10784.42.

The National Stock Exchange's 50-share Nifty ended at 3240.15, down 22.15 points or 0.7 per cent. Intraday, it touched a high and low of 3267.95 and 3221.95, respectively.

Increased weakness in the State Bank of India, Reliance Industries, ITC and few software shares in the last hour of trade negated persistent strength in most pharmaceutical and downstream oil companies' shares.

The broad weakness was evident in the over 2:1 lead of losers on the BSE. The mid-cap B1 group was the worst hit, with 75 per cent of shares posting a loss.

"Correction is a common feature witnessed during the last two weeks of March. There might be a huge correction in the immediate term, however, the long-term bullish view remains," said a dealer at a local brokerage.

The dealer advises investors to bear in mind the past trends and take decisions based on fundamental factors such as earnings visibility and sectoral outlooks.

He is more bullish on front line shares as they offer fundamental strength and as he expects mid-cap shares to be worst hit by any correction.

The dealer did not rule out fall of nearly 300 points in the Sensex from the current level, adding this would only help rejuvenate investor confidence.

His views are in line with a Morgan Stanley note on Monday anticipating a at least a 600-700 point fall in the Sensex. In case of such a correction, Morgan expects the Sensex to find short-term support at 10,580.