Markets end 5 pc lower, techs lose ground

MUMBAI, MAY 8: Stock markets ended sharply lower on Monday as profit takers, led by foreign institutional investors, took advantage of las...

MUMBAI, MAY 8: Stock markets ended sharply lower on Monday as profit takers, led by foreign institutional investors, took advantage of last week’s recovery and hammered down prices of Infosys and other infotech shares. The bellweather Bombay Stock Exchange Sensex closed 4.91 per cent, or 230.48 points, lower at 4,463.40 in volatile trading.

Stocks rose in early deals, but reversed course in the afternoon as absence of large institutional buying unnerved speculators. The fall in Infosys brought down the rest of the sectors where most stocks had hit upper limits of eight per cent in early deals. With one of the biggest FIIs in the market selling heavily in index-heavyweight counters like Infosys and Zee Telefilm, the market entered into another bearish zone after a brief hiatus. Data from the BSE showed 575 issues advanced, 620 declined and 93 unchanged; 114 traded stocks hit new lows. The total traded volume was 56.81 million shares.

The broader 50-share National Stock Exchange index closed 4.09 per cent, or 58.20 points lower, at 1,364.20. Leading software shares ended lower: Infosys was down 11.14 per cent at Rs 7,552.80, Wipro 12 per cent lower at Rs 2,841.95 and DSQ Software 12 per cent limit down at Rs 760.85.

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The weak sentiment pulled old economy stocks lower. Consumer goods firm Hindustan Lever closed six per cent lower at Rs 2,385 and cement and textile firm Grasim Industries fell the daily maximum of 12 per cent to Rs 239.45. “The steep fall in three index heavyweights like HLL, Reliance and Infosys clearly reveals that there is a game-plan to keep the Sensex artificially depressed,” said a dealer.

The market fall on Monday came after the sharp recovery on Thursday and Friday. Sensex finished 3.07 per cent, or 139.96 points, higher at 4,693.88 on Friday. The sentiment was strong after Thursday’s five per cent jump in the BSE Sensex due to tax breaks announced for some sectors by the government.

On Monday, the market was highly volatile once again, with the indices moving in and out of the negative territory. In the first 15 minutes of trade the BSE Sensex swung from a high of 4744.83 to a low of 4640.18 – a swing of more than 100 points. Exchange officials said that the upward rally in the last two days had been completely belied by the volatility and the crash in the market today.

Investors feel that the intra-day swings in trading was a worrying factor. They feel that the market is being held ransom to a few large speculators and operators, while genuine investors are almost missing. Some players in the market with huge amount of finances at their disposal were indulging in `index bashing’.

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Monday’s performance of Infosys American Depositary Receipts at the Nasdaq exchange will be watched keenly. Dealers said Tuesday, the last day of account at the National Stock Exchange, could see position squaring which might depress share prices further. "The rally on last Thursday and Friday was very sharp, some profit-booking had to come at higher levels," said a dealer.

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