Sebi for caution, market snaps winning streak

The selling commenced after top Sebi officials met the presidents of major stock exchanges and discussed the market situation on Tuesday afternoon. “Sebi officials told the exchanges to be cautious about any kind of manipulation in stock prices. The meeting also discussed about the rising turnover and share prices. Sebi told the exchanges to tighten the vigilance,” said a market source.

“The market displayed extreme volatility. It opened firm in the morning and gained ground in early trades as buying interest continued on the back of strong corporate results. However, selling pressure emerged in afternoon trades, pulling it down from the higher levels,” said a stock dealer, adding, “the Sebi intervention seems to have stopped the rampaging bulls at least for the time being.”

Sensex had risen by over 32 per cent in the last three months. From 2,966.63 on May 2, 2003, Sensex has shot up by nearly 900 points to Tuesday’s high of 3,878.72. In the last one month alone, Sensex has gone up by 7 per cent — or 256 points — on sustained buying by funds and operators. Though some of the stocks shot up on fundamental factors, there was rigging in several stocks, including banking and pharma stocks.

Foreign funds and big operators were major sellers. The profit-booking came as soon as Sensex hit the 3850 level. “Funds and operators who bought stocks at lower levels last week booked the profits. The correction was overdue. There was a sustained rally in the last two weeks,” fund managers said.

Selling pressure was seen almost across the board after early gains. While old economy —notably cement and automobile —pivotals led the fall, pharma and tech stocks declined on profit booking after recent gains. Heavyweights SBI, HLL and Reliance contributed to the fall of the market from the higher levels. With the earnings-reporting season over, the market now needs a fresh trigger for continuation of the rally. Players say that a correction at the current levels will be good for the market.

Gujarat Ambuja (down 5% to Rs 223.45) came off its 52-week high on profit booking. Other cement pivotals ACC (down 4.29% to Rs 195.05), L & T (down 3.45% to Rs 280.15), Grasim (down 2.99% to Rs 560.25), SBI (down 2.99% to Rs 414.70), HLL (down 2.63% to Rs 162.75) and Reliance (down 2.35% to Rs 346.70) contributed to the fall of the Sensex.