Sensex ends below 19,000; cap goods, IT, oil & gas slip

Indian benchmarks retreated on Wednesday after a rally was seen in the previous session, dragged down by oil & gas, technology, capital goods, FMCG and cement companies' shares along with HDFC, HDFC Bank, SBI and NTPC. The Nifty was completely flat in the first half of trade but a sell-off in heavyweights in the last couple of hours pulled the 50-share NSE Nifty below the 5700-mark to close at 5,691.05, with a loss of 33 points or 0.58%.

Hemang Jani, senior vice president of Sharekhan said another 100-200 points cut on the Nifty could be possible. "Low flows from FIIs, high commodity pricing and possible policy tightening may lead to a realignment of portfolios, which may go on for a few months. But the downside in the market is limited because it has already started factoring in some of these developments. Probably, another 100-200 point cut on the Nifty could happen," he reasoned.

Laurence Balanco of CLSA too feels that the index could test 5300-5500 support zone in near term. "The Nifty has conclusively broken below the short-term uptrend support drawn off the late November 2010 lows which should result in a thorough test of the 5,300-5,500 support zone in the near-term."

The 30-share BSE Sensex closed at 18,978.32, down 113.73 points or 0.6%. Vineet Bhatnagar managing director of MF Global also expects another 120-points compression on the Nifty. "The foreign institutional investors have sold USD 1.3-1.4 billion in the index futures and cash market," he said.

On the sectoral front, the BSE Capital Goods, IT and Oil & Gas indices fell one percent each. However, the markets were supported by metal and realty companies' shares - respective indices went up 1.7%.

Heavyweights Reliance Industries and ONGC were down 1-1.5%. Engineering firm L&T's shares lost nearly 2%; BHEL and Siemens declined 0.5-1%.