Sensex tanks 742 points as investors book profit
May 27 2014 , Mumbai
Sensex took a 742-point plunge from the day’s high of 25,175, which some analysts attributed to profit booking.
But, the index closed marginally higher from last Friday’s close at 24,716.88.
Coming ahead of the expiry of derivative contracts on May 29, the sharp correction in several stocks was possibly due to unwinding of positions in futures and options, some market watchers said.
Rikesh Parikh, VP for institutional corporate broking at Motilal Oswal Securities, said a correction was healthy from the market’s point of view.
“It gives investors opportunity to buy stocks at reasonable entry prices,” Parikh adds.
The 30-pack index opened 221 points up, made an intra-day high of 25,175 in the morning and traded above the psychological mark of 25,000 for most of the day, but saw wild swings in the second half amid brisk selling.
Cyclical stocks that had run up sharply in the so-called hope rally saw deep cuts. Select blue chips like Reliance Industries (2.38 per cent) and SBI (2 per cent), BHEL(4.79 per cent), Tata Power(4.11 per cent), GAIL (3.64 per cent) were among the losers. The Sensex hit an intra-day low of 24,433 amid profit booking before closing for the day at 24,716.88, up 23.53 points. Nifty closed in the red at 7,359.05, down 8.05 points, after swinging more than 200 points in intra-day.
The deepest cuts were seen in midcap realty, power, infrastructure and PSU bank stocks. The BSE midcap index declined 2.11 per cent and the smallcap index 2.24 per cent after rallying for six straight sessions.
Foreign institutional investors were net buyers of equities worth Rs 416.80 crore while domestic institutional investors ended the day as net sellers of stocks worth Rs 135.80 crore.
Among the sectoral indices, BSE realty index fell the most at 5.22 per cent, while BSE power index (2.94 per cent) and BSE PSU index (1.32 per cent) were among other big losers.
Realty major DLF tanked 5.63 per cent, Unitech 4.90 per cent, HDIL 9.16 per cent and Indiabulls Real Estate 6.50 per cent.
“The market celebrated the NDA victory for a good length of time with most beaten-down stocks and cyclical plays rallying, and a correction on account of profit booking was largely expected,” said Parikh of Motilal Oswal Securities.
Shrikant Chouhan, head of technical research at Kotak Securities, said Nifty’s decline towards 7,230 would be an opportunity to buy frontline stocks. “On the higher side, 7,500 will be a resistance to watch out for. The market’s ability to trade above 7,500 will be crucial in the near term. Sustaining above the 7,500 mark will open the gates for the index to move higher,” he said.
As many as 1,775 stocks on the BSE closed in the red while 1,397 gained and 126 others ended unchange.