Sensex falls for fourth day, Nifty ends below 5,300

mumbai  08 29, 2012, 17:10 IST

 

The BSE Sensex fell on Wednesday for a fourth straight session to mark its longest losing streak since mid-July, as ONGC was hit after Morgan Stanley downgraded the stock, while Jaiprakash Associates slumped on rising concerns about its net debt levels.

Blue chips such as Infosys also reeled as broader sentiment remained weak ahead of the expiry of August derivative contracts on Thursday and April-June economic growth data on Friday.

Although Indian shares have not fallen drastically over the past four sessions and are still up for the month, analysts are growing worried about the outlook given the potentially toxic mix of slow growth, sticky inflation and delayed policy reforms.

 

Continued inflows from foreign investors have contributed to the gains this month, with around 181.6 billion rupees in net purchases since the start of July, bringing the total for the year to 601.54 billion rupees.

"Liquidity in a market without fundamental support is like a pain killer: stop the pill and the pain relapses," said Vijay Kedia, a director at private wealth management firm Kedia Securities.

Kedia adds that the government has been dangling the "lollipop of reforms" for the last six months without actual action, as the economy has become more fragile.

The BSE Sensex fell 0.8 percent to 17,490.81 points, its biggest daily percentage fall since July 26.

The index has matched the four-day losing streak in July 11-16, although the BSE is down 2 percent during this period compared to the 2.9 percent fall during that streak last month.

The Nifty declined 0.88 percent to 5,287.80, to close below the psychological level of 5,300 for the first time since August 6.

ONGC fell 2 percent after Morgan Stanley downgraded the stock to "equalweight", citing potential downward revisions to domestic crude oil volumes for fiscal 2014 and uncertainty on international production.

Jaiprakash Associates fell 9.2 percent on Wednesday, its single biggest daily fall since September 22, 2011. Concerns about net debt levels increased a day after the cement maker raised $150 million in foreign currency convertible bonds, in part, to redeem prior debt.

Infosys fell 1.4 percent after Deutsche Bank warned the software services exporter has not seen any changes to its near-term business outlook, citing a conversation with company CFO V. Balakrishnan.

Other blue chips fell on worries India will post weaker-than-expected economic growth data on Friday. Reliance Industries fell 1 percent while Housing Development Finance Corp lost 1.1 percent.

However, Wipro rose 0.1 percent after HSBC upgraded the stock to "overweight" from "neutral", saying the software services exporter was "competing effectively" for large deals, and adding the company is well positioned to improve sales after its "extensive restructuring.