Sensex sheds 435.07 points on weak cues

Sensex sheds 435.07 points on weak cues
The Financial Express, Corporates & Markets, June 18, 2009, Page I

fe Bureau, Mumbai

Weakness in the major Asian and European equity indices along with a disappointing advance tax payment reported by corporate India on Tuesday prompted investors back home to book profits that pulled down the domestic equity indices to register its biggest drop in last seven weeks.

According to finance ministry data, Indian companies paid around Rs 23,000 crore of taxes in advance for the first quarter of FY10. This is almost flat as compared to the previous year's receipts.

The 30-share Sensex of the Bombay Stock Exchange (BSE) fell by 435.07 points or 2.91% to close the day at 14552.84 points. On the other hand the broader 50-share Nifty of the National Stock Exchange (NSE) ended the trading session at 4356.15 points losing 3.58% or 161.65 points.

Majority of the Asian equity indices too ended the day in the red with Hong Kong’s hang Seng shedding 0.45%, Singapore’s Straits Times losing 0.73% while Kuala Lumpur’s KLSE Composite ending the day lower by 1.56%.

European shares too traded weaker after Office for National Statistics in Britain reporting the unemployment rate for the three month ending in April 2009 at 7.2%, up from 6.5% reported during January 2009.

Market experts attribute the sharp correction in the share prices to stretched valuation. “The market was definitely in a overbought territory. Since the equity prices have rallied higher unabated in the last couple of weeks, investors chose to thin down their positions to re-enter at the lower level”, said, Gopal Agrawal, head of equity – Mirae Asset Global.

Further the adverse court ruling against the Reliance Industries Ltd (RIL), largest company in terms of market capitalization, on the RIL-RNRL gas issue continued to dampen the sentiments in the domestic bourses. RIL extended its loss by another 4.24% or Rs 90.80 to close the day at Rs 2,141.60.

According to the provisional figures released by the stock exchanges, Foreign Institutional Investors (FIIs) were net sellers of equity worth Rs 363.99 crore while Domestic Institutional Investors (DII) bought equity worth Rs 569.10 crore.

‘Market breadth’ which indicates the overall health of the market remained extremely weak throughout the trading session with 1,990 stocks in BSE declining when compared to 686 stocks that advanced on Wednesday. Among the Sensex pack 29 stocks ended the day deep in the red lead by Tata Steel, Tata Motors, Jaiprakash Associates, Reliance Communication and DLF Ltd.