Heavy profit booking hammers down mkts

Profit-booking and a degree of caution ahead of the release of the US non-farm payroll resulted in selling pressure in the market. However, the absence of significant negative surprises in Q4 earnings thus far, along with a decline in oil prices, might help to mitigate the downside - Vinod Nair, Head (Research), Geojit Financial Services

Benchmark indices, BSE Sensex and NSE Nifty, took a quick U turn on Friday as they nosedived by over 1.3 per cent breaking down the three support levels as traders and speculators resorted to heavy profit booking in index heavyweights RIL, L&T, HDFC Bank, and Airtel, etc. BSE Sensex tanked by 1,627.85 points or 1.6% from intra-day’s high of 75,095.18 points to the session’s low of 73,627.99, while broader Nifty-50 tool tumbled by 289 points, hitting the day’s low of 22,358.65 points. All sectoral indices were trading lower.

The 30-share BSE Sensex finally dropped 732.96 points or 0.98 per cent and settled at 73,878.15 after soaring 484.07 points earlier in the day. NSE Nifty also declined 172.35 points or 0.76 per cent to 22,475.85 points. The benchmark hit a record 22,794.70 in the early trade, up 146.5 points or 0.64 per cent.

Analysts attribute major reasons for the blood bath on the bourses to recent record highs as Sensex and Nifty moved up by over 4.5 per cent from their recent lows in the last two weeks. Further, majority Asian indices were trading lower.

“Profit-booking and a degree of caution ahead of the release of the US non-farm payroll resulted in selling pressure in the market. However, the absence of significant negative surprises in Q4 earnings thus far, along with a decline in oil prices, might help to mitigate the downside. “Though the correction was broad-based, the large-cap stock was the key underperformer due to the moderation of FII’s exposure to the domestic market,” said Vinod Nair, Head (Research), Geojit Financial Services.

Perhaps, the domestic markets are losing steam to go further upward as they rose to record highs during the last six months on hopes of BJP’s third term in power, observe analysts.

Sensex was trading higher at 75,046 points in the first hour of trading, near to its all-time high of 75,124 points. Its counterpart, NSE Nifty rose to a fresh life-time high at 22,795 points, but tumbled to a low of 22,455points, down 340 points in intra-day deals. It’s second time the Nifty retraced sharply after crossing the 22,700 level. However, sudden downfall began from 10am onwards. And the fear gauge, India VIX, also surged 11 per cent to 15 level. India VIX gained for the 7th consecutive session.

Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said: “Markets failed to capitalise on the firm start despite upbeat US and European cues and crashed on the back of broad-based selling, as investors worried over premium valuations of local stocks offloaded their holdings. Weakness in banking, telecom, oil & gas and realty stocks led the slump, even as Dow Futures indicated an upbeat start. As valuation discomfort rises, investors are becoming choosy and taking select bets. Uncertainty over interest rate, gloomy geopolitical scenario and FII fund outflows have prompted investors to book profits at regular intervals.”

(With inputs from agencies)