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Business News/ Money / Sensex ends 70 pts down; Reliance extends fall
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Sensex ends 70 pts down; Reliance extends fall

Sensex ends 70 pts down; Reliance extends fall

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Mumbai: Indian shares edged 0.4% lower on Monday to their lowest close in more than two weeks, mainly pulled down by continued weakness in energy major Reliance Industries and as investors booked profits in select stocks.

Reliance Industries, which has the heaviest weight on the Sensex, extended losses after partner Hardy Oil said on Friday it will stop exploring a well for gas in the D9 block off India’s east coast.

The stock declined 1.6% to Rs2,015.45, its lowest close in seven weeks.

However, many market participants think the battering of the stock was an overreaction.

“One dry well does not mean there is no hydrocarbon in the block," Goldman Sachs said in a note and pointed that Reliance Industries’ deepwater exploration success rate has so far been 67 percent.

“RIL will continue drilling in D-9 and given the D-9 resource estimates by an independent agency, we believe there is decent probability of RIL striking reserves in the future," Goldman Sachs added in the note released over the weekend.

The 30-share BSE Index closed 0.42% or 70.31 points lower at 16,740.50 points, its lowest close since 9 October. Sixteen of its components declined. The 50-share NSE index closed 0.52% lower at 4,970.90.

Last week, the benchmark saw its largest weekly fall in 11 weeks.

“The way we had run up, the fatigue was bound to come in," said Hitesh Agrawal, head of research at Angel Broking.

“In the near term, with global cues not being very supportive and most positives already priced in, the stocks will be rangebound. But the long term outlook remains positive," added Agrawal.

Foreign funds which have which have poured in a total of more than $14 billion in Indian equities so far this year, were net sellers in two of the four sessions last week.

“I would not worry too much. Everybody has the right to book profits," Agrawal said.

Leading Lenders such as State Bank of India and ICICI Bank shed 2.05% and 1.5% respectively.

These banks have risen more than 32% and nearly 19% respectively since the start of September.

The Indian central bank is scheduled to hold its policy review meet on Tuesday, where it is expected to keep its benchmark lending and borrowing rates on hold, a Reuters poll showed earlier this month.

Cigarette-to-hotel business firm ITC was up 1.8% at Rs264.50, after it reported a forecast-beating 26.3% rise in its September quarter net profit.

“We believe the cigarette, paper and agri businesses hold the key to profit growth in FY10," brokerage Motilal Oswal said in a note.

“Hotels, which have been a drag from the past one year, should start contributing meaningfully from the next quarter," the brokerage said while maintaining a “buy" rating on ITC.

India’s top vehicles maker Tata Motors climbed 1.9% to Rs539.35, ahead of its September quarter results announcement.

Export-focussed software firms gained the most, on improving sector outlook.

Top outsourcer Tata Consultancy firmed 0.5% while rival Infosys Technologies was up 0.6%.

TCS also said its deal pipeline for Asia-Pacific has improved in the past two months led by financial services and revenue could grow at a double-digit pace this year.

In the broader market, losers outnumbered gainers in the ratio of 1.8:1 in a relatively lower volume of 357 million shares.

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Published: 26 Oct 2009, 04:45 PM IST
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