Tuesday, November 11, 2008

Sensex plunges on technical sell-off

Almost all the gains made in last two sessions were wiped out on Tuesday, as investors booked profits tracking the fall in global markets

and due to lack of buying support. Foreign funds and traders exited realty, metal and power stocks which had run up recently.

Equities opened lower trailing other Asian peers after euphoria over China’s stimulus package fizzled out. What began as technical profit booking soon turned into a sell-off as foreign funds pressed the sale button, said marketmen.

Benchmarks breached psychological technical supports but ended just off the day’s lows.

“Sensex reacted exactly from the ‘Bearish Engulfing’ pattern formed on Nov 5 when it fell almost 900 points from its day’s high of 10945. As seen from daily chart, Sensex has established a range bound movement between 9631 and 10945. If the negative trend continues, any move below support of 9631 would lead to 9321- 9258 and one can expect a bounce back. Overall trend would turn positive only above 10945. Sensex move above 10945 without moving much below 9258 level would indicate a bullish break out of the ‘Inverse Head and Shoulder’ pattern,” said Birendrakumar Singh, technical analyst at Religare Securities.

Bombay Stock Exchange’s Sensex tumbled 696.47 points or 6.61 per cent to end at 9,839.69. The 30-share index touched an intra-day low of 9,799.45 after opening at a high of 10,405.39.

National Stock Exchange’s Nifty ended at 2938.65, down 6.66 per cent or 209.6 points. The 50-share index hit a low of 2,919.45 from high of 3,147.20 in the day.

The cut was not so severe for secondline stocks. BSE Midcap and Smallcap indices ended 3.41 per cent and 2.51 per cent lower respectively.

Among frontline stocks, Jaiprakash Associates (-12.21%), Sterlite Industries (-11.03%), Tata Steel (-10.98%), Hindalco Industries (-10.18%), DLF (-10.15%) and BHEL (-9.65%) were the worst hit.

ITC, up 0.06 per cent, was the lone gainer in the 30-share index.

All the sectoral indices ended in the red. BSE Realty Index plunged 10.25 per cent, BSE Metal Index closed 8.42 per cent lower and BSE Power Index declined 7.70 per cent.

Though the markets are range bound and taking cues from the movement in Asian markets, improvement in industrial growth may provide some positive sentimental impact on Wednesday. Industrial growth is expected to have risen 5-7 per cent in September from the 13-year low of 1.3 per cent in August.

But drying volumes are a cause of concern for the market. Monday’s surge came on lower volumes. According to NSE website, total traded value today was Rs 8,821.63 crore, so far the lowest this month.

Market breadth on BSE was extremely weak with 1,766 declines against 759 advances.

Decline in US stocks futures were pointing to a low opening later Tuesday. Dow Jones stock futures were down 1.27 per cent, S&P 500 futures were 1.20 per cent lower and Nasdaq stocks futures fell 1.35 per cent.