Two-day rally fizzles out, Sensex sheds 225 points from the day's high

24 Mar 2009, Tuesday
The two-day rally came to a halt on Tuesday, as investors resorted to profit booking which took away all the good work done during the day. Market watchers said volatility will remain high in the next two days ahead of the derivative contracts expiry for March.

“After a sharp rally in the last few sessions, the correction witnessed Tuesday was bound to happen. However, the short term trend (the run-up to the elections) still remains upward. In fact, according to technical charts, Nifty to reach 3100 levels in the next 3-4 days and around 3250 in 15 days.

National Stock Exchange’s Nifty settled at 2938.70, down 0.04 per cent or 1.2 points. The index touched a high of 3017.40 and low of 2914.50 during the day.

Bombay Stock Exchange’s Sensex ended at 9,471.04, up 0.5 per cent or 47.02 points. The index slipped from a high of 9,699.00 to a low of 9,402.64 intra-day.

Brokers said this fall was expected and there were signs of investor fatigue, with a slowing economy and uncertainty about the outcome of upcoming general elections.

The Congress party today presented its election manifesto. Among other measures, it said it would include a hugely subsidised food scheme in new measures to protect farmers and the poor from the impact of the global slowdown. Some economists see the move increasing the country's spiralling fiscal deficit.

The market kickstarted trade on a firm footing celebrating the rally across global equities after the US administration unveiled a plan to mop up toxic assets from banks' balance sheet. The 50-share Nifty even managed to surpass the 3000 mark in early trade. Till noon, key indices moved from strength to strength.

But the rally was shortlived, and the buying activity gave way to selling pressure. A mixed opening on the European bourses also played on investor sentiment. Metals were the worst hit. Healthcare and consumer durables did not participate in the rally.

Among frontline counters, Reliance Capital (-6.84%), SAIL (-6.28%), Reliance Communications (-5.62%), Idea Cellular (-5.53%), Hindalco Industries (-5.38%) and Reliance Infrastructure (-4.96%) faced selling pressure.

But banking stocks were in demand for a major part of the day on the back of gains across global financial stocks. The BSE Bankex settled 2.18 per cent higher after surging more than 6 per cent through the day.

HDFC Bank (5.99%), Siemens (5.56%), Suzlon Energy (4.81%), Zee (3.74%) and Unitech (2.86%) held onto gains.

Secondline stocks were badly beaten. BSE Midcap Index ended down 0.58 per cent and BSE Smallcap Index edged 0.68 per cent lower.

Market breadth, which started on a strong note, worsened in late trade. On BSE, 1395 declines outnumbered 1134 advances.

Meanwhile, stocks across Asia-Pacific posted significant gains mirroring Wall Street. In Japan, the Nikkei 3.3 per cent, Hong Kong's Hang Seng index was up 3.4 per cent and South Korea's Kospi gained 1.9 per cent. Elsewhere, Shanghai's index rose 0.6 per cent, Australia's ASX added 0.8 per cent and Taiwan's benchmark was up 2.3 per cent.

However, European markets painted a mixed picture. Britain's FTSE 100 was down 1.2 per cent while Germany's DAX 30 and France's CAC-40 added 0.2 per cent each.