The Hindu : Business : Sensex nosedives 120 points in volatile trading

Online edition of India's National Newspaper
Thursday, Jan 13, 2005

Business

Business

Sensex nosedives 120 points in volatile trading

By Oommen A. Ninan

MUMBAI, JAN. 12. The Sensex lost 120 points today due to selling pressure across the board in an extremely volatile trading. From its all time high of 6696.31, touched on January 4, the Bombay Stock Exchange index lost around 600 points.

Up 41 points in early trades, the BSE 30-share sensitive index (Sensex) ended with a loss of 120.13 points or 1.93 per cent to close at 6102.74 against 6222.87. On the National Stock Exchange, the Nifty was down by 38.45 points at 1913.60. The Sensex opened at 6250.35, touched a high of 6263.71, declined to a low of 6070.33 and finally closed at 6102.74.

"I think it's a reaction which got extended because of slowdown in inflows from foreign institutional investors and the fall was across the board," said Prabhat Awasthi, Head, Equities and Research, Brics Securities. Amid worries on foreign fund inflows, the market failed to retain its early gains, which moved up on impressive quarterly results from Infosys. The market witnessed a setback in FII inflows in the last few days, as they became sellers. The FIIs pulled out Rs. 32 crores on January 10. It pulled out another Rs. 68.30 crores on January 7. This is in contrast to strong inflows in the last two months. The FII inflows topped a record $8.51 billion in 2004.

As the fall was across the board, most of the large and mid-cap stocks have corrected. "It's just a normal correction. There is no fundamental change as we see it. We advise investors to ignore the day-to-day market movements and instead focus on stock selection," said Tridib Pathak, Chief Investment Officer, Cholamandalam Asset Management Company Ltd.

On the BSE the trades recorded a trading volume of Rs. 2,519.29 crores against Rs. 2092.05 crores.

While pharmaceutical stocks led the fall, selling was seen in power, automobile, oil and gas, banking and metal stocks. Surprisingly, investors ignored improved quarterly results from companies such as Infosys Technologies, Mastek and Sterlite Optical. Amid alternate bouts of buying and selling, the market displayed extreme volatility.

Even after Infosys announced better results and revised upwards the earning guidance for the rest of the year, its share price ended lower at Rs. 1903.35 against Rs. 1970.95.

However, other information technology companies, TCS, Wipro and Satyam ended with gains.

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