Markets see sharp cut led by bank, IT, telecom, RIL, ONGC

15 January 2009

The benchmark indices retreated on the back of profit booking in heavyweights and lost all of Wednesday's gains. Weak global cues also fuelled to negative sentiments. Shares of technology, banking, realty, power, telecom, metal and oil & gas exploration companies took a huge beating on the bourses followed by midcap and smallcap stocks.

Both indices witnessed selling pressure throughout the session, despite dip in inflation numbers. Inflation for the week ended January 3 has come out at 5.24% as against 5.91% week on week (WoW). It was in-line with CNBC-TV18 estimates, which earlier saw a figure of 5.29%. Inflation was expected to be sharply lower due to fall in prices in first week of January, largely, non-administered fuel prices.

The wholesale price index (WPI) for all commodities was down 0.2% at 229. November 8 WPI has been revised to 8.71% versus 8.9% (provisional).

Saugata Bhattacharya, Economist, Axis Bank, sees negative inflation numbers by July-August. "If there is a fuel prices cut, then inflation may be in the negative region by May." He does not expect any rate cuts at RBI's January 27 meet unless any negative surprise comes in.

The 30-share BSE Sensex slipped below psychological 9000 mark again in today's trade and hit an intraday low of 8,946.62. The index closed down by 323.75 points or 3.45% at 9,046.74. The 50-share NSE Nifty was looking like it would test 2700 mark but that did not happen, as it went closer to the same level two times. It was down by 3.48% or 98.60 points at 2,736.70. All sectoral indices ended in red.

Vineet Bhatnagar, MD, MF Global, sees 2,710 as crucial level for Nifty. "A breach of this may take the Nifty to October 2008 lows." He feels implied volatility is likely to start spiking up if markets slip further.