Indices drop sharply on the day of derivative settlement

27 October 2005

Indices opened the day with a small positive gap and the Sensex inched up towards the 8000 mark in early trades. There was no clear market direction till around noon and the indices moved in a narrow band.

Some big ticket results came out just after noon and the failed to excite the markets. Though most results were in line with market expectations, they were not enough to push the markets up. By then the traders started panicking as it was the last day of October series of derivatives and started unwinding their positions.

The Sensex slipped below 7900 by early afternoon as heavy selling was seen in stocks like SBI, ICICI Bank and Bharti. The indices tried to recover some ground before heavy selling in the closing minutes led to another sharp fall. There was no recovery from there and the indices closed near their day's lows.

The long positions in the futures segment built and carried forward over the past few months were unwound considerably. As the markets had declined without a pause over the last two weeks, most traders decided to cut their positions. Confidence was clearly lacking among the traders to carry forward their long positions to next month series.

Bharti Televentures declined 8 per cent as the company's quarterly results failed to excite. Though the results were better than expected, there were no positive surprises.

VSNL, momentum leader during last few months, was one of the most significant losers among index stocks. At one point the stock was trading with losses of more than 12 per cent before closing 10 per cent lower.

Banking stocks were among the worst hit as most of the large cap banking stocks lost considerable ground. Both ICICI Bank and SBI lost around 6 per cent each.

Reliance Industries lost nearly 2 per cent despite reporting better than expected profits for the second quarter.

Technology stocks were relatively better off as the losses were much lower than other sectors. HCL Technologies was the biggest loser closing more than 7 per cent lower. Satyam declined close to 3 per cent while Infosys lost nearly 2 per cent. TCS lost well over a per cent while Wipro lost close to a per cent.

ONGC managed to close half a per cent higher and was one of the few which managed to hold its head above the water. The company reported better than expected quarterly profits yesterday.

Most auto stocks also could not survive the carnage. Maruti was the biggest loser closing more than 3 per cent lower. Tata Motors followed with losses of close to 3 per cent. Bajaj Auto lost close to 3 per cent. Hero Honda managed to close the day with gains of over 2 per cent while M&M added a per cent.

Among the engineering stocks BHEL lost 5 per cent while L&T lost more than half a per cent.

Ranbaxy remained firm for most of the session before giving up and closing with marginal gains in closing trades. Other pharma stocks like Sun Pharma, Dr. Reddy and Cipla closed with substantial losses. Glaxo continued its rally and closed more than 3 per cent higher.

Sensex closed at 7798, a loss of 176 points, and the Nifty at 2353, lower by 55 points. Nifty November futures closed at a discount of 5 points to the spot index.

Glaxo, Hero Honda and HDFC were the major gainers among Nifty stocks while VSNL, Bharti and HCL Technologies were the major losers.

Reliance Industries has reported a net profit of Rs2,481 crore for the September quarter as against Rs1,752 crore during the previous year quarter. Total revenues increased to Rs20,939 crore for the quarter as compared to Rs16,460 crore during the previous year quarter. The profits were better than market expectations as both refining margins and petrochemical prices remained strong during the quarter.

SBI has reported a consolidated net profit of Rs1,591 crore for the quarter ended September as against Rs1,228 crore during the previous year quarter. Consolidated income for the quarter was higher at Rs13,974 crore as against Rs13,142 crore.

The quarterly profits of SAIL declined by 25 per cent to Rs1,127 crore as compared to Rs1,513 crore during the previous year quarter. Total income for the quarter was higher at Rs7,156 crore as compared to Rs6,808 crore during the previous year quarter.

Telecom major Bharti Televentures has reported a net profit of Rs507 crore for the quarter ended September as against Rs293 crore during the same quarter of previous year. Total revenues for the quarter were higher at Rs2,743 crore as compared to Rs1,917 crore.

GE Shipping has reported a net profit of Rs177 crore as against Rs167 crore during the previous year quarter. Total revenues were higher at Rs551 crore as compared to Rs498 crore.

The quarterly net profits of Indian Rayon has increased more than 4 times to Rs38 crore from Rs7 crore during the previous year quarter. Total revenues for the quarter were higher at Rs954 crore as against Rs759 crore.

Larsen & Toubro has announced that it would sell its glass container business. The company said the move would help in focussing more on its core businesses. The value of the deal has not been disclosed.

Mid-Cap Action

Mid-caps were no better than the frontline stocks till late afternoon. However, they did not see the panic selling witnessed in frontline stocks during the last half hour of trade. The losses on the mid-cap index were lower than those of frontline stocks at the end of the day. The CNX Mid-Cap index lost 66 points and closed the day at 3470.

Television Eighteen has announced that Global Broadcast News, 74 per cent owned by the company, would tie up with Turner International to launch a new general news channel. Turner International is part of US media giant AOL-Time Warner and owns well knows media franchises like CNN. The new channel would be co-branded as CNN-IBN.

TV18 said the new channel would be launched before the year end. Media professionals and employees hold 26 per cent stake in Global Broadcast News. TV18 was one of the few stocks in the mid-cap space to survive today's sell off and closed with gains of over 6 per cent.

Kotak Mahindra Bank has reported a net profit of Rs83 crore for the quarter ended September as compared to Rs33 crore during the previous year quarter. Total income during the quarter almost doubled to Rs620 crore as compared to Rs318 crore during the previous year quarter.