Markets lose ground ahead of F&O expiry

Written by Markets Bureau | Agencies | Mumbai | Updated: Dec 24 2008, 06:41am hrs
Indian equity indices continued to remain under pressure ahead of future and option (F&O) expiry on Wednesday and ended the day on the negative terrain after three straight days of gain.

Domestic markets opened the day with a positive gap; however, during the intra-day trade, it turned volatile as some profit-booking was witnessed due to lack of positive cues in the market. In fact, the undercurrent of the possible war against Pakistan was around the traders with no fresh long positions being built up. In fact, there has been a sustained short positions being built up, especially in the large-cap segment.

In Asia too, bad news continued to take key indices down. Except for Phillipines, most markets traded in the negative zone. The MSCI Asia Pacific excluding Japan Index dropped 2.5% to 238.65. Toyota's loss and the less than expected rate cut by the Chinese central bank added to the gloom.

In India, the 30-share Sensex of the Bombay Stock Exchange (BSE) lost 241.60 points, or 2.43%, to close the day at 9,686.75 points. The broader S&P CNX Nifty of the National Stock Exchange (NSE) was down 70.65 points, or 2.32%, and ended the day at 2,968.65 points. All the sectors in the BSE sectoral indices ended the day in red; realty, bankex and consumer durables were the worst performers.

An analyst from a leading broking house said, Due to the expiry of derivatives contract, there was some uneasiness in the market. Lack of cues further contributed to the anxiety. Markets will now look at the quarterly earning season, which starts next week.

Overall, the market breadth was negative. Out of 2,559 stocks traded on the BSE, 1752 closed in the red, 725 closed in green and 82 remained unchanged. Among the Sensex stocks, 29 ended in the day in red territory while one ended in green.

Meanwhile, after three straight days of net buying, foreign institutional investors turned net sellers again. They net sold equities worth Rs 224 crore on Tuesday. The annual net outflow from FIIs now stands at $13 billion. The net selling coupled with some year-end purchase funding made by importers caused the rupee to fall by a whole percentage point. The rupee fell a third day, extending yesterday's biggest loss in six weeks. It was seen trading at to 48.48 per dollar, the lowest since December 12.

However, the India's 10-year bonds advanced, snapping a two-day decline, on speculation that a slide in commodity prices will help ease inflation. Yields have dropped from a seven-year high as government data showed that the inflation rate almost halved after reaching the highest since 1992 in August.

Crude oil has tumbled 73% from its July record of $147.27 a barrel, while the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials has declined more than 50%.