Rate cut no help, Sensex plunges

The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell sharply today, led by sell-offs in banking and oil & gas stocks.

The morning session was dominated by Goldman Sachs’ latest report on ONGC, in which it had raised several concerns about the company, including corporate governance, and reiterated its ‘sell rating’. The report alleged that the government took $20 billion cash from the company without consulting minority shareholders.

There were also concerns that the Reserve Bank of India’s (RBI’s) 50-basis-point cut in its repo and reverse repo rates was too little to lift the faltering growth.

The Sensex closed down 248 points, or 2.9 per cent, at 8,197 points. The S&P CNX Nifty also closed down 69 points, or 2.59 per cent, at 2,576 points.

There were mixed signals from other Asian markets too. Key benchmark indices, such as the Shanghai Composite and the Nikkei 225, rose 1.04 per cent and 2 per cent, respectively. However, the Hang Seng was down 1 per cent.
 

DOWNHILL Top 10 BSE sectoral index losers
	Close	Chg(%)*
BANKEX #	3728.22	-4.15
OIL&GAS	5625.26	-3.71
FMCG	1886.73	-3.26
POWER	1615.49	-3.26
CG #	5476.75	-2.63
PSU	4718.26	-2.00
METAL	4466.25	-1.77
Pharma #	2541.02	-1.56
TECk  #	1638.81	-1.41
* Change over previous close # Indices at 52-week low

Other than the consumer durable index, which closed flat, all other sectoral indices were down. Bankex slipped by 4.15 per cent, oil & gas by 3.71 per cent and power by 3.26 per cent. In fact, three sectoral indices – bank, pharma and technology – fell to their 52-week lows.

Among stocks, Ranbaxy suffered the most. India’s largest drug maker’s share price slipped by 9.4 per cent to Rs 144.05, which was its lowest since July 2001. There were reports that Ranbaxy was being investigated by Australia’s top medicine regulator, after one of the Indian company’s plants was banned by US authorities for ‘falsified test results’.

ICICI Bank, Tata Power and Reliance Industries all lost over 5 per cent.

Manish Sonthalia, senior vice-president, research and strategy of Motilal Oswal said: “Hedge funds are selling heavily as there is still redemption pressure on them. Although it is likely that markets are near to their bottom, much will depend on the stability of US and other European markets.”

As per the BSE’s provisional figures, foreign institutional investors (FIIs) were net sellers to the tune of Rs 494 crore. Domestic institutional investors (DIIs) brought shares worth Rs 118 crore today.

Data from BSE reflects that, since the beginning of 2009, FIIs have net sold stocks worth Rs 9,822 crore, while DIIs were net purchasers in equity to the tune of Rs 7,469 crore.

“While it is likely that interest rates may still come down, it seems that the markets are nearly bottoming out,” said Deven Choksey, managing director of Mumbai-based K R Choksey Shares and Securities.