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Sensex slips 0.85%; Tata Steel rallies

Sensex slips 0.85%; Tata Steel rallies
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First Published: Tue, Jul 21 2009. 06 00 PM IST
Updated: Tue, Jul 21 2009. 06 00 PM IST
Mumbai: The Bombay Stock Exchange Sensex fell 0.85% on Tuesday, snapping a two-day winning streak and shrugging off gains in global peers, as investors cashed in profits from a 13.4% rally over the previous five sessions.
Outsourcer Infosys Technologies, private-sector lender ICICI Bank and diversified cigarette maker ITC Ltd led the main index lower after it climbed 3% on Monday.
“The way the market has run up recently surprised everybody, and even today, the correction has not been that much,” Gajendra Nagpal, chief executive of Unicon Financial Intermediaries, said from New Delhi.
Leading outsourcer Tata Consultancy fell 4.5% to Rs477.40, after surging 15.3% on Monday following 22% rise in quarterly profit that beat estimates.
Tata Steel erased losses of as much as 3.6% and rebounded 5.3% to Rs411.75 as the world’s No. 6 steelmaker said it raised $500 million in an issue of global depositary receipts (GDRs) at $7.644 each.
Each GDR is equivalent to one domestic share and the pricing was done at roughly 5.4% discount to Monday’s close.
Traders said the stock fell at the start on equity dilution concern, but the pricing was favourable after the stock had jumped about 150% from its March low.
The 30-share BSE index ended down 128.52 points at 15,062.49, after falling 1.5% at one stage. Twenty-one stocks declined.
“It is time we had a healthy correction,” Ambareesh Baliga, vice president at Karvy Stock Broking said. “Valuations had become expensive.”
The benchmark had risen 9.2% last week, the best among major markets in Asia, after the government raised hopes for financial reforms and monsoon rains, crucial to the domestic-demand powered economy, picked up after a weak start.
There have been concerns about pricey stocks and the domestic economy, but ample liquidity and a spike in risk-appetite across the world on increasing hopes for a recovery in the global economy has supported the market.
“I don’t think we will see a significant fall from here as there is too much liquidity sloshing around,” Unicon’s Nagpal said.
Traders said even though short-term investors may look to take profits, the momentum in overseas markets and bright prospects for longer-term gains will spur investors to enter the market at dips.
“I would advise investors not to lose focus on the India growth story because of short-term gyrations,” said Dinesh Thakkar, chairman and managing director at Angel Broking.
“Every correction provides a wonderful opportunity to buy a share of India’s long-term potential that yet remains to be unleashed.”
The BSE index is up 56 percent this year after slumping by more than half in 2008. It has leapt 87% from a 2009 low in early March, riding a stocks rally that has swept across the globe.
Analysts see more gains over the next 12 months, with record low global interest rates and trillions of dollars in stimulus spending appearing to help the world recover from the worst recession in 80 years.
No. 2 IT-services firm Infosys eased 1.5% to Rs1,943.10, while ICICI shed 1.9% to Rs772. ITC dropped 2.5% to Rs219.75.
In the broader market, losers marginally led gainers 1,350 to 1,303 on above-average volume of 464.7 million shares.
The 50-share NSE index fell 0.7% to 4,469.10.
Most other Asian and European shares were higher on Tuesday, after upbeat company earnings reassured investors that an economic recovery was taking root and a last-minute rescue of US lender CIT Group boosted confidence.
Japan’s Nikkei rose 2.7%, while MSCI’s measure of other Asian markets gained 0.2%.
At 1018 GMT, the FTSEurofirst 300 index of top European shares was up 0.6%.
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First Published: Tue, Jul 21 2009. 06 00 PM IST
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