Sharp drop in inflation fails to cheer markets

Written by Markets Bureau | Mumbai | Updated: Dec 28 2008, 03:35am hrs
Key equity indices witnessed huge volatility throughout the trading session and closed the day on a negative note, despite inflation numbers coming down. Sharp fall in advance tax payment by the companies in third quarter coupled with weak cues from the European markets and reports of tension between India and Pakistan hammered the domestic markets during the final trading hours.

The 30-share Sensex of Bombay Stock Exchange (BSE) closed lower by 239.80 points, or 2.51%, at 9,328.92 points. Dealers in the market say, there was lot of profit booking in the markets, as markets opened the day with positive gap. The broader S&P CNX Nifty of National Stock Exchange (NSE) lost 59.60 points, or 2.04%, to end the day at 2,857.25 points.

The advance tax payments by the Indian corporates fell by 22% to about Rs 42,600 crore during the December quarter over the same period last year. Indian bourses started the day with smart gains and continued after the dip in inflation figures. Inflation stood at 6.61% for the week ended December 13.

Amitabh Chakraborty, president-Equities at Religare Securities said, We have always seen lack of volumes after the settlement day in the Indian markets. As it was a holiday mood there was lack of proper participation. The markets were unpredictable from the beginning, but the news of worrisome situation over Indo-Pak border impacted the markets negatively.

Barring Health Care (HC) all the sectors in the BSE Sectoral indices ended the day on negative terrain, interest sensitive sectors like Realty, Bankex and IT were the worst performer of the day at BSE.

Dealers also say that, overall outlook of the markets in the coming days would depend on stimulus package to be announced by government at any given day. Volatility will continue to dominate the domestic markets as quarter results are expected to be dismal.

The market breadth was negative as out of 2,532 stocks traded on BSE, 1,597 stocks closed in red while 866 stocks closed in green and 69 stocks remained unchanged in BSE.