Inflation spooks market; Nifty ends below 2900

Inflation spooks market; Nifty ends below 2900

Equities retraced intraday gains and ended sharply lower for the second straight session Thursday as a higher-than-expected inflation rate weighed on investor sentiments. Metals and oil & gas stocks took a hit while realty and healthcare ended flat. Domestic inflation rate for the week ended Oct 25 was 10.72 per cent against 10.68 per cent a week ago. The figure disappointed traders who expected it to come in single digit. Stocks opened gap-down following correction in global markets on fears of recession, which came to the fore after the US elections were over. Shares of Tata group companies Tata Steel and Tata Motors were under tremendous pressure. Investors also continued to exit Reliance Industries.

Bombay Stock Exchange’s 30-share Sensex closed the day at 9,734.22, down 385.79 points or 3.81 per cent from the previous close. The Index touched a high of 10,109.45 and low of 9,635.22. National Stock Exchange’s Nifty ended at 2,892.65, down 102.30 points or 3.42 per cent. The 50-share index touched an intra-day low of 2,860.25 and high of 3,007.80.

BSE Midcap Index was down 2.24 per cent and BSE Smallcap Index closed 2.13 per cent down. “We are in normal correction after a phenomenal rise and may retrace below today’s low to 2746 and 2560, which forms a strong support base for the Nifty. For a higher bottom formation, Nifty has to turn from any of these above levels and should close above 3240 for two consecutive days, which would raise possibility of a 700-800 points rally on the Nifty. If market doesn’t breach low of 2860 on Friday then the levels of 3008, 3051 and 3122 will act as sell area. Close above 3122 will be positive for the market. Short term averages are trending flat and long term 200 DMA and 30 DMA are downwards,” said Bharat Gala, head technical analyst, Ventura Securities.

Tata Steel (-13.67%), Tata Motors (-12.17%), Sterlite Industries (-11.33%), Reliance Industries (-7.71%) and Hindalco (-7.50%) were the top Sensex losers.

Among stocks, Tata Motors has decided to shut production at its Jamshedpur facility for medium and heavy vehicles for three days beginning Thursday to tide over plummeting demand which had an impact on the auto company's share price. Tata Steel extended losses for the second straight day after ArcelorMittal's guidance for the current quarter painted a bleaker picture than expected and market participants forecast dismal Corus earnings for the quarter to Sep 30, 2008. Selling in Reliance Industries continued on reports that company was shutting five polyester plans at Patalganga, and a research report by securities firm ABN Amro downgrading the stock price to Rs 1,150. Jaiprakah Associates (4.10%), Ranbaxy Laboratories (3.72%), Hindustan Unilever (3.05%) and DLF (2.46%) were the top gainers. Fall in global commodities prices on concerns of demand slowdown took its toll on metal stocks. BSE Metal Index ended 8.41 per cent lower. Banking shares extended losses on worries over liquidity to meet the credit demand, although many public sector banks announced lending rate cuts and leading private sector banks are likely to follow next week. The BSE Bankex ended down 3.41 per cent at 5,442. Bank of India was worst hit and ended the session 6.11 per cent lower at Rs 259.50, followed by SBI and PNB, down nearly 4.5 per cent to Rs 1215 and Rs 470, respectively. ICICI Bank shed 4 per cent to close at Rs 434, while HDFC Bank was down by 3.10 per cent to Rs 1060.55. Market breadth was negative on the BSE with 1,633 declines and 869 advances.

Sensex sheds 386pts amid high volatility
Sensex ends 386 pts down on weak global cues
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Source:ET,BS,Sify etc