Sensex Loses 1.25% on Budget Eve

Ivaylo
27 Feb, 2007
New York City

The market opened with a positive bias but sentiment was embittered as the ruling Congress party lost in two state polls. That, coupled with the record plunge in the China market, pressed Indian stocks lower. Volatility was high and all sectors ended in negative territory. HDFC Bank, ACC and Maruti led the few gainers, while Bajaj Auto and Hero Honda led the decliners. The government said growth is sustainable despite rising inflation.

[R]8:00AM NY-7:00PM Mumbai Sensex declines on selling pressure, weak global markets.[/R]
The Sensex on BSE finished 170.69 points, or 1.25%, lower at 13,478.83. The market was highly volatile and traded within a range of 294.85 points. The market-breadth was slightly positive as 1,330 stocks advanced, 1,205 declined and 62 were unchanged. Of the 30 stocks in the Sensex, seven advanced while the rest 23 declined. The turnover on BSE was Rs 4,019.74 crore, higher than Rs 3,956.87 crore on Monday. On NSE, the turnover was Rs 8,148.78 crore, lower than Rs 9,046.18 crore on Monday.

Economic news

The government announced on Tuesday that there was no need to worry over the economy''s rapid growth, and added that the momentum is sustainable even though containing inflation would be difficult. The government made the announcement on the eve of the release of the annual budget due Wednesday, February 28.

State election results showed that the ruling Congress party, is about to lose in the states of Punjab and Uttarakhand on voter concern about inflation and economic reforms.

Trading highlights

JSW Steel was the most-active stock with a turnover of Rs 163.65 crore followed by Power Finance and Global Broadcast.

Advancers

HDFC Bank led the gainers, despite the mixed trend in banking stocks on fears that rising inflation may bring about raising the interest rates. HDFC Bank gained 2.6% to Rs 976.2. Construction shares and large-cap Maruti Udyog also gained. Construction shares advanced on hopes that the budget will help the infrastructure sector, whereas Maruti Udyog added on expectations of cuts in excise duty on cars. Maruti gained 1.5% to Rs 887.7. ACC advanced 1.6% to Rs 961.1. ACC rose after Swiss Holcim increased its stake in Ambuja Cements India Private Ltd, a company which owns 35.15% of ACC.

Decliners

ICICI Bank lost 3.3% to 875.7. Although the trend was mixed, banking stocks were sold on concerns of rising inflation that could lead to hikes in interest rates, which could hit credit growth. Auto makers exhibited considerable weakness. Hero Honda shed 3.6% to Rs 680, and Bajaj Auto declined almost 3.2% to Rs 2,724.3. IT large-caps slipped. Satyam Computer lost 2.4% to Rs 450.5, Wipro shed 1.9% to Rs 602, TCS lost 1.4% to Rs 1,264 and Infosys shed nearly 1% to Rs .4% to Rs 2,195.15. Satyam Computers has made an alliance with US global defence and technology company Northrop Grumman for expanding in the global aerospace and defence market place.

Unlike ACC, Gujarat Ambuja Cements shed 2.3% to Rs 124.50, after the cement company announced it sold 11% stake in Ambuja Cements India to Swiss company, Holcim, for Rs 527 crore. ONGC, the oil exploration leader, declined despite higher global crude oil. The stock shed 2.1%, to Rs 817.4. Index heavy Reliance Industries lost 0.2% to Rs 1,401.