Pharma stocks recover as IT shares freeze at lower levels in selling mayhem

Our Markets Bureau

Mumbai, Sept 12: Wednesday's selling mayhem on the local bourses was a bad day that saw further slide in stock prices all-round. The Sensex settled to near its six-year low. More than 80 per cent of traded stocks were settled at lower levels. Amidst this, the pharma stocks recovered while those of the software sector were seen frozen at lower levels.

The bad story that troubled investors and speculators on the bourses was that of the possible impact on the economic front following Tuesday’s bombing in the US by terrorists. This collectively dampened the sentiments and the market opened with a huge gap of over 120 points from Tuesday’s close.

The Sensex opened the day 120 points down at 3030.29 and sank dipper into red. It touched a low of 2954.22 before staging a recovery on back of recovery in pharma stocks. The Sensex ended the day at 3032.71 down, 117.69 points. The National Stock Exchange (NSE) S&P Nifty pierced the psychological barrier of 1000 and ended the day at 982.20.

Compared to the previous two days, volumes and turnover were relatively higher on both the BSE and NSE. While, the BSE logged volume and turnover of 4.81 crore shares and Rs 1,087 crore respectively. On the NSE, the turnover was at Rs 1,740 crore amidst increased volumes of 7.79 crore shares. Interestingly, most of the stocks witnessed an average drop of 5 per cent in their prices.

“This is nothing but clear indication of negative sentiments in the market,” said an analyst with a brokerage firm. A technical analyst with another brokerge house said: “In case, if the Sensex falls below 3000-level, then in all possibility it could reach 2800-2850 levels, the next resistance level.”

Companies whose earnings are directly dependent on exports of their products to the US, like software and pharma, witnessed heavy selling. While Dr Reddy’s and Glaxo recovered, most of the software firms were quoting at 10 per cent lower levels of the circuit filter. Infosys Technology closed the day at Rs 3,179.35.

According to Kotak Mahindra Mutual Fund CEO Shekhar Sathe: “After initial knee-jerk reactions, the markets have stabilised and since the fundamentals of the economy remains the same as they were earlier, there is no need to panic.”

“The overall reaction is more fear psychosis on the financial and economical fronts,” said Crisil-Infac research head Ravishankar. “India should not fear much negative impact from these developments, especially because the share of country’s total exports in the GDP is just around 10 per cent and is therefore, to a
large extent is insulated from external shocks.”

Lastly, Pranav Securities director and CEO Rajesh Jain said: “India should not have negative backlash of the attacks on the US. If India manages to handle this situation politically well, there should be no reasons to worry.”

“Barring developments on the crude oil front, the fundamentals of Indian economy remains as they were earlier and everything’s is seen good,” Mr Jain said.