Sensex dips 78 pts on profit-booking

Sustained profit-booking by institutional investors and speculators shaved 78 points off the 30-share BSE Sensex on Monday, extending the lo...

Sustained profit-booking by institutional investors and speculators shaved 78 points off the 30-share BSE Sensex on Monday, extending the losses for the third consecutive trading session. The Sensex closed 2.14 per cent down at 3,569.58 points, while the 50-share Nifty of the National Stock Exchange (NSE) closed down 24.20 points at 1,115.80 points.

The heavy-weight stocks which pushed the Sensex below 3,600 points included MTNL, Hindustan Lever, ITC, Infosys, Tata Engineering and Tata Steel. With Monday’s losses, the Sensex lost 180.42 points, or 4.81 per cent, from its peak of 3,750 hit on Thursday, which also happened to be a 26-month high level for the Sensex.

Hitesh Sheth, technical analyst at Prabhudas Lilladher Securities, said: “Some panic-selling was witnessed in the last hour of trade on Monday. In the last three trading sessions, basket selling (selling index stocks) has been seen in the last hour of trade.” He added: “The corrective phase started from Thursday last.

Good Telco results
fail to cheer market

Story continues below this ad

Mumbai: India’s largest automobile company Tata Engineering & Locomotive Company Ltd has reported a massive 257.86 per cent jump in net profit at Rs 100.31 crore for first quarter ended June 30, 2003, compared to Rs 28.03 crore for the same period of previous year.

Net sales/income from operations also increased from Rs 2087.24 crore in Q1 of last year to Rs 2,922.70 crore in Q1 of fiscal 2003-04. Domestic sales of commercial vehicles in Q1 were 26,705 units (21,201 units in Q1 of last year), a growth of 26 per cent. Sales of the passenger vehicles were at 30,118 units as against 17,556 vehicles sold in the same period last year.

The company also reported its decision to change its name to Tata Motors Ltd. “The company internally has decided on Tata Motors Ltd as the new name, as it defines the businesses we are in,” Telco chairman Ratan Tata said at the company’s annual general meeting here.

Referring to the low-cost small car project, he said the company has the potential to make an attempt and added, “we are not saying that we could succeed, but we can give it a try”. He said it will take at least four-five years and the company needs to adopt an “unconventional approach”. It would not involve stripping down of a car, but starting to build a car from a scratch. ENS Economic Bureau

Story continues below this ad

However, the big sell-out was seen on Monday and the market failed to absorb it in the absence of back-up buying by any funds.” Dealers said it looks like funds which are investing in index funds are offloading stocks in line with the weightage of those stocks in the indices. “The slowdown in FII inflow and selling by hedge funds, which can also be termed as fast operators, are also weighing on the market. The immediate support level for the Sensex now is at 3,550 points followed by 3,435 levels,” said Sheth.

On Thursday, FIIs were net buyers to the tune of Rs 25.20 crore, while on Wednesday they were net sellers to the tune of Rs 50.80 crore.

Said Sashi Krishnan, CIO of Cholamandalam AMC: “The slide of about 180 points from a high of 3,750 on Thursday is more a correction than anything else. It looks like speculators who had entered at lower levels are booking profit. However, the underlying trend still looks positive.”

Among software stocks, Satyam Computer finished down 5.13 per cent, Infosys lost 3.17 per cent and HCL Technologies was weaker by 2.39 per cent. Despite posting a Q1 net profit of Rs 100.31 crore as against Rs 28.03 crore in the corresponding quarter, Telco lost 4.83 per cent to close at Rs 215 on profit-booking. MTNL was down 4.95 per cent, HPCL slipped 4.01 per cent, HLL lost 3.74 per cent on downgrade by select foreign brokerage houses.

Story continues below this ad

ITC fell 2.87 per cent, Reliance Industries was down 1.06 per cent and Tisco finished lower by 3.32 per cent.

Anuj Kapoor, derivatives manager, SSKI Securities, said: “Open interest of about Rs 127 crore got squared up on Monday and about Rs 6,300 crore is still left open.”

Kapoor said: “The fall in the prices of the cash market has increased the premium between the futures and cash market because of the higher implied volatility. This means players in futures market don’t want to give up their long position and see this has a temporary correction. Despite just over a week left for the settlement of July contract the cost of carry is still as high as 15 per cent.”