Indices continue to bleed

There seems to be no end to the gloominess prevailing in the market as the indices continue to be buffeted by weakness in global markets and drying up of FII inflows. Today's session was extremely volatile with the indices moving in and out of positive territory in morning trades. Just when hopes were raised in the early afternoon when select heavyweights rallied, the indices tumbled once again on heavy selling pressure. Sensex closed at 6454, down 81 points and the Nifty at 2026, down 35 points. Nifty futures are quoting at an 8 point discount to the spot index.

As expected, the US Fed Reserve raised interest rates by 0.25 per cent to 2.75 per cent. A statement from the Fed chairman about inflation worries was enough to pull down the US indices to the lowest levels seen this year. Both Dow and NASDAQ lost close to a per cent each. Oil declined by about 2 per cent on profit booking by traders.

Indian ADR's had a particularly bad day with all of them losing ground. HDFC Bank, Tata Motors, VSNL and MTNL all lost more than 3 per cent each. The tech pack Wipro, Satyam and Infosys lost more than a per cent each.

Reliance group stocks staged a smart rally in the early afternoon on rumors of a settlement between the feuding brothers to be announced soon. Reliance Industries, Reliance Energy and IPCL all shot up between 3 to 4 per cent each and dragged the Sensex back into positive territory for a brief period. However, all three stocks gave up part of their gains towards close of the session.

Pharma stocks saw good gains early in the day as the Patent (Amendment) Bill passed by the Lok Sabha yesterday is perceived as providing some relief to Indian pharma companies as compared to the earlier version of the bill and the patent ordinance issued by the government. Indian pharma companies like Dr Reddy's and Ranbaxy, who are focusing on the generic space, may find the new product patent regime more palatable because of the clauses added to the Bill.

Banking stocks were among the largest losers. SBI lost more than 5 per cent while Punjab National Bank lost more than 2 per cent. Among the smaller PSU banks, Union Bank lost close to 10 per cent while Indian Overseas Bank lost close to 8 per cent. Private sector bank major HDFC Bank as well as its parent HDFC lost close to 4 per cent each. ICICI Bank lost over a per cent.