Market Review: Stocks drop as traders take profits after 5-day rise

Market Review: Stocks drop as traders take profits after 5-day rise

Stocks finished a choppy session lower on Thursday as traders took profits after a 5-day winning streak. The rally, which was fueled by a combination of positive global cues, domestic politics and lower oil prices, fizzled out as European stocks turned negative and investors turned cautious ahead of inflation data due after market hours.

"The rally over the past few sessions has given index returns of about 20 per cent, so it's only natural for traders to lock in some gains. The fall in crude and the trust vote victory have given a fillip to the market, but it would be too hasty to call this a reversal," said Hitesh Agrawal, head of research at Angel Broking.

National Stock Exchange's Nifty ended at 4433.55, down 43.25 points or 0.97 per cent. It touched a high of 4,539.45 and low of 4,385.85. Bombay Stock Exchange's Sensex closed at 14,777.01, down 165.27 points or 1.11 per cent. The index fell to a low of 14,608.05 from a high of 15,130.09.

Among frontline stocks, Tata Consultancy Services (5.66%), Tata Steel (5.66%), Reliance Communications (5.06%), State Bank of India (4.46%), ACC (4.25%) and BHEL (2.88%) were badly hit. ONGC (3.25%), DLF (2.35%), Reliance Industries (1.81%), Maruti Suzuki (1.8%), Reliance Infrastructure (1.23%) and HDFC Bank (0.7%) were the gainers. Secondline stocks were comparatively less affected. BSE Mid-cap Index closed down 0.62 per cent at 5,580.90 and BSE Small-cap Index ended 0.24 per cent lower at 6,796.11. Market breadth on BSE showed 1,258 advances and 1,458 declines.

Now that the political situation has stabilized, investors will go back to examining the fundamentals, which, analysts say, are still not very favourable. The wholesale price index is forecast to have risen 12.03 per cent in the 12 months to July 12. India's inflation currently stands at 11.91 per cent, the highest in over 13 years. "The under currents have certainly taken a turn for the better.

Inflation is also starting to fall in line with expectations. With the UPA holding fort, the market is looking toward some changes in the banking and insurance sectors, amongst other economic reforms. Corporate earnings so far have not taken up aback; there have been no major downgrades," Angel's Agrawal said. "But we have the monetary policy review at the end of the month, so there is some scepticism on that front. Also, the monsoon has not really set in, which is another worry for the market," he added. Price of oil was steady below $125 a barrel on Thursday.

US light crude for September delivery has dropped $23 since it hit a record above $147 earlier this month. Stocks ended mostly higher in the East Asian region as investors cheered the fall in crude oil. Japan's Nikkei 225 rose 2.2 per cent, China's Shanghai Composite Index closed 2.55 per cent higher and the South Korean KOPSI added 2.2 per cent. Benchmarks in Hong Kong and Singapore ended flat with a negative bias. In Europe, the UK FTSE 100 was down 0.77 per cent, German DAX 30 had dropped 1.09 per cent and the French CAC 40 slid 0.88 per cent, at the time Indian markets closed.

Source:ET