Sensex falls 1.2% on earnings worries

Sensex falls 1.2% on earnings worries
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First Published: Wed, Dec 24 2008. 06 19 PM IST
New Delhi: Indian shares skidded for a third day, falling 1.2% on Wednesday to their lowest close in more than two weeks, as investors braced for poor quarterly earnings due in January.
There were also worries foreign portfolio investment could take a knock as recessions in the US, the eurozone and Japan took their toll.
Shares in Satyam Computer plunged as much as 18.3% to a five-year low after it was barred from business with the World Bank for eight years, dealing another setback for the no. 4 Indian outsourcer following a botched move into the construction industry.
However by close the stock, which had fallen 13.6% on Tuesday, clawed back to limit losses to 3.9% at Rs134.95 as some investors termed the loss was excessive after the stock fell nearly 50% in just six trading sessions.
The main 30-share BSE index, shed 1.22%, or 118.03 points, to 9,568.72, its lowest close since 8 December, with all but five components in the red.
The market, which is closed on Thursday for Christmas, has lost 5.3% this week after rising 4.2% last week.
“This is typical of a bear market where you see such technical rallies,” Kohli said. “But fundamentally nothing has changed.”
The benchmark is still up 5.2% in December, but down nearly 53% in 2008 that has made it one of the worst performers in Asia and setting it on course to end a six-year gaining streak.
“The trend could turn positive again if global indices rebound, and (foreign funds) resume their shopping spree,” brokerage India Infoline said.
Emkay’s Kohli said the outlook for inflows from foreign funds were dim. The funds been net sellers of $13.3 billion of India stocks in 2008, compared with a record net purchase of $17.4 billion last year.
Data showed the funds were net sellers of $67.3 million of shares on Tuesday, trimming the total purchases in December to $395 million.
Top petrochemicals maker Reliance Industries, the heaviest stock in the BSE index, extended its decline to be down 1.5% at Rs1,241.20. Brokerages have said a sharp fall in crude prices would hit the firm’s refining margins. The stock has lost 8.7% in four trading sessions.
Banking stocks rose on short covering as investors expected another round of rate cuts by the RBI to shore up a slowing economy.
The finance ministry said on Tuesday in its mid-year economy review that an aggressive monetary policy might be necessary if the global economic depression continues to adversely affect the manufacturing sector.
Separately, a key economic adviser said it would be desirable to cut the RBI’s two key policy rates by 100 basis points each.
Top lender State Bank of India closed up 1.8% at Rs1,286.40 rupees, while No. 2 ICICI Bank.
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First Published: Wed, Dec 24 2008. 06 19 PM IST
More Topics: India | Stocks | Satyam | Marketa. Sensex | BSE |