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Sensex Suffers 323-pt Drop

Negative global and domestic cues hit Indian stock markets

After two days of gains, the Bombay Stock Exchange sensitive index Sensex dived by as much as 323.99 points to 13,589.23, after touching an intra day high of 13991.46 and a low of 13,518.79. This was a decline of 2.33 per cent over the previous day’s close of 13,913.22. Nifty closed at 4,116.70, also down an almost similar amount at 2.85 per cent.

Amongst the biggest losers on the Sensex were Reliance Communications, Ranbaxy, Tata Motors, NTPC and Bharti Airtel – the last suffered for the second day after it had indicated its earnings may fall on plans to merge with South Africa’s MTN.

Among the varying causes were the question mark hanging over investors heads whether the current rally is going to sustain, or whether the valuations have crept above fair value; with North Korea following up its nuclear test with intentions launching missiles, the global markets, especially the Asian ones were deprived of their confidence; on the domestic front, India’s biggest private telecom company Bharti Airtel’s M&A game with South Africa’s MTN has caused a lot of uncertainty that showed in its scrip being beaten down; and with the futures and options expiry nearing people were booking profits.

However, on another front, two of the biggest Indian corporates, Reliance Industries and ICICI Bank, saw some huge downsides after booking some great ones over the last two months. The bigger you are the harder you fall, seems to be their case for the day. Both the heavyweights, which had virtually doubled and trebled their market value in the period between 9 March to 25 May, from Rs 181,592.69 crore to Rs 345,189.49 crore (a jump of 90%)and from Rs 29,272.93 cr to Rs 78,322.93 crore (a gain of 167.56%), notched up losses -- while Reliance fell by 2.25 per cent, ICICI Bank fell by 5.25 per cent on Tuesday.

A similar story repeated itself elsewhere too. Profit-booking was seen as the major reason for BSE Small-cap to shed 3.12 per cent after a rally of 5 per cent on Monday (May 25, 2009). Of the total 465 stocks 344 were in negative zone. BSE Mid-cap too closed 3.40 per cent lower at 4,724.09 against previous close of 4,890.15.

All the sectoral indices except for BSE IT ended the day in negative zone. BSE IT managed to stay afloat with a marginal gain of 0.85 per cent. Among the biggest losers of the day were BSE Realty and BSE Bankex. BSE Realty was down 3.96 per cent and BSE Bankex by 3.13 per cent. BSE Capital Goods and BSE Consumer Durables also turned in a loss of around 3 per cent.

As far as specific stocks are concerned all Sensex stocks ended with a loss, except Hindalco Industries (gained 3.23per cent), Infosys Technologies (2.34 per cent), Wipro (1.54per cent) and Sterlite Industries (0.33 per cent). The biggest loser were Reliance Communication, which shed 9.56 per cent and Ranbaxy Laboratories with a 8.36 per cent loss.

Biggest gainers of the day (Group A)
Company Name   Last Traded Price    Last Closing Price   Change (%)
Spice Communication 80.25 61.6 30.28
Rei Agro  80.15 75.55 6.09
Indiabulls Financials Services 204.95 195.2 4.99
Jai Corp 236.9 226.6 4.55
LIC Housing Finance 446.85 427.9 4.43

Biggest losers of the day (Group A)
Company Name   Last Traded Price    Last Closing Price   Change(%)
Tulip Telecom 637.85 716.8 -11.01
Housing Devp & Infra  264.6 293.6 -9.88
Reliance Comm 291.45 322.25 -9.56
Titan Industries 957.95 1,052.20 -8.96
Tech Mahindra 439.6 481.95 -8.79