Sensex plunges 241 points on profit booking

Written by Markets Bureau | Mumbai | Updated: May 10 2009, 04:15am hrs
Despite Indian equity indices closing the final day of the week below the dotted line, stock prices of Bharati Shipyard Ltd surged over 12.5%, after the company picked up 14.89% equity stake in Great Offshore on Thursday.

The stock of Bharati Shipyard closed the day at Rs 107.40, gaining Rs 12.10 or 12.70% at the Bombay Stock Exchange (BSE). However, on Friday, the benchmark indices witnessed huge volatility on the back of profit-booking coupled with rise in inflation and intense selling in banking stocks. This led the markets to end the day in the red.

BSE closed the day below 12K at 11,876.43 points, down 240.51 points or 1.98%, while the broader S&P CNX Nifty of National Stock Exchange (NSE) lost 63.20 points or 1.72% to end at 3,620.70 points. Inflation stood at 0.70% for the week to April 25 as against 0.57% a week earlier.

This also depreciated the sentiments in the markets.

However, domestic markets continued its weekly gaining streak as both the benchmark indices surged by over 4% in the last one week, as global markets rallied on signs of a revival in the world economy and domestic growth coupled with fresh inflows from the foreign institutional investors (FII).

On Monday, BSE rallied by 731.50 points, but in the subsequent days, domestic markets witnessed some amount of selling. In the past few days there has been some good profit bookings in the markets, which is not surprising as everyone is unsure about the elections results which are slated to come out on May 16, said Deven Choksey, MD of KR Choksey Securities.

With strong cues from the global markets, domestic markets once again on Thursday closed the day on green terrain. Dealers in the market say, On Friday, Asian and European markets rose, after US government's long-awaited bank stress tests proved to be roughly within expectations, lifting uncertainty over the market and supporting equities. The US bank stress tests results released said that 10 of the 19 financial firms tested would need to raise a total of $75 billion in additional capital.

On Friday, market opened on flat note tracking mixed cues from the global markets and soon turned volatile. During the intra-day trading, benchmark indices slipped into red after inflation data and continued to extend their losses.

Barring Consumer Durables (CD), all the sectors in the BSE sectoral indices ended the day in red with the banking and metal sector being the worst performers of the day. The breadth of the market remained mixed as out of 2,623 stocks traded on BSE, 1,266 stocks advanced while the same numbers of stocks declined and remaining 91 stocks remained unchanged. In Sensex, only four stocks managed to advance while remaining 26 stocks ended in red.

Meanwhile, BNP Paribas securities has given a 12 month Sensex target of 15,000 points, a 24% increase from the current level, following a turnaround in the earnings expectation. In its latest market strategy report, Clive Mc Donnell, head of equity strategy, states, Recent client visits clearly indicate that there remains a significant pool of pension fund capital that has not increased its weight to emerging markets, but is keen to use any correction as an opportunity to increase its exposure. This implies that corrections are likely to be shallower than the 15% originally forecast. We are also upgrading the Indian market to overweight with an index target of 15,000, reflecting the ability of the market to attract foreign capital to plug its twin deficit as well as a shallower downturn in earnings relative to original forecasts.