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| Sensex slips on RIL ruling |
| BS Reporter / Mumbai Jun 16, 2009, 00:51 IST |
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Analysts say market will regain strength in the next 5-6 days.
Reliance Industries (RIL), which has the highest weight in the Bombay Stock Exchange (BSE) Sensitive Index, or Sensex, played a big role in pulling down the indices On Monday. This was after the Bombay High Court asked the company to supply gas to Reliance Natural Resources (RNRL) at almost half the government-approved price. As a result, the stock slipped 7.48 per cent.
The Sensex fell 362.52 points, or 2.4 per cent, to 14,875.52. The S&P CNX Nifty retreated 2.2 per cent to 4,484.
Asian markets elsewhere mostly ended in the red. Japan’s Nikkei lost about 1 per cent, Singapore’s Straits Times 2.55 per cent and Hong Kong’s Hang Seng lost about 2 per cent. On Friday, the Dow Jones Industrial Average had ended marginally down.
“The index suffered largely due to the fall in the Reliance stock. But, some profit-booking is likely at these levels, especially in sectors like metal and realty that have been rallying over the past few months”, said Sanjay Sinha, CEO at DBS Cholamandalam Asset Management Company.
The verdict led to 7.48 per cent fall in the RIL stock. RIL has a weight of 15.97 per cent in the Sensex. The price of RNRL rose 24.11 per cent.
Consequently, the oil & gas index was the biggest loser and slid by 4.51 per cent. Metal and consumer goods followed by slipping 3.86 per cent and 3.66 per cent, respectively.
The market breadth was negative by a huge margin — 1,876 stocks declined as against 767 advances. Metal giants Sterlite and Tata Steel lost 7.61 per cent and 4.77 per cent, respectively, on the BSE.
However, market experts are not too disappointed with this fall, which started on Thursday. Most believe the market will regain strength in the next five-six days and continue its momentum till the Union Budget.
“The Nifty may correct a maximum of another 50 points and then the markets will tune in with their global peers. Since open interest has gone up substantially, it may take a week for the futures and options to roll over, after which the markets will be bullish again,” said Kishore Ostwal, chairman and managing director, CNI Research.
Some market experts felt that the Sensex could rally up to 16,000 points before the Budget. “FII (foreign institutional investment) inflows may continue. There is also support from domestic institutions. So, instead of selling at every rise, investors should look at the long-term prospects. The markets should have an upward bias in the next 12 months,” added Sinha.
Both FIIs and domestic institutional investors (DIIs) were net sellers, according to provisional data from the BSE. FIIs were net sellers of Rs 411.54 cr in the cash market while DIIs were net sellers to the tune of Rs 586.63 crore.
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