Sensex retreats after hitting 21,000; tech stocks slump

Oct 25 2013, 03:37 IST
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SummaryThe last time the Sensex was above 21,000 was on November 8, 2010.

After almost three years, the benchmark Sensex on Thursday crossed the 21,000-mark but gave away the gains to close 42 points down as cautious investors booked profits ahead of next week’s RBI monetary policy meet and monthly expiry of derivative contracts.

The index, which had surged to 21,039.42 at the outset for the first time since November 2010, surrendered the gains to close down 42.45 points, or 0.20 per cent, at 20,725.43.

The 50-scrip NSE Nifty index fell by 14 points, or 0.23 per cent, to 6,164.35, after climbing to 6,252.45.

The last time the Sensex was above 21,000 was on November 8, 2010. The index’s all-time high is 21,206.77, hit in January 2008. Shares have benefited from a return of global risk appetite as poor US data has pushed back expectations of any tapering of the Federal Reserve’s monetary stimulus until 2014.

Foreign investors continued to buy shares, remaining net buyers for a 14th consecutive session. Provisional exchange data showed a net purchase of Rs 644 crore on Wednesday, bringing the total to about Rs 11,734 crore during that period. However, investors are also taking the opportunity to book profits especially on recent outperformers.

Sanjeev Zarbade, vice president, Kotak Securities, said: “The Sensex opened on a strong note despite negative global cues. A sharp drop in crude oil prices may have aided the market sentiment. However, the gains were shortlived as the rally evaporated by the middle of the trading session. We note that the Indian market has been outperforming its global counterparts helped by revival in FII flows and an extension in QE3 withdrawal timeline.”

Apart from this, corporate numbers from the ongoing results season have also been better than expected, which has kept the momentum going. “In the coming weeks, Fed and RBI monetary policy meeting and the state election results would be closed watched,” Zarbade said.

However, a section of market watchers has cautioned retail investors against investing at high levels.

“The rally is not realistic. Growth numbers are still not visible while the rate cut cycle is far away. Nifty has run up for expiry considerations in oversold market. Now the market is overbought and headed for a sharp correction,” said Kishor P Ostwal, CMD, CNI Research.

IT stocks led the decline on the bourses. TCS fell 2.52 per cent, Wipro 4.25 per cent, while Infosys ended 0.43 per cent lower on profit taking. The NSE index for IT shares

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