Mumbai, Nov. 9: The sensex stumbled at the start of a new trading year — Samvat 2064 — and for the first time in seven years ended the Muhurat session in the red.
The bellwether index had opened strong at 19282.70 but, within 30 minutes of the short 1-1/2 hour trading session, it tumbled below 19000 as investors pummelled frontline stocks such as Reliance Industries, ICICI Bank, Bharti Airtel and the State Bank of India. The index plunged to a low of 18737.22 before clawing back to 18907.60 — a fall of 151.22 points.
The Muhurat is an annual rite and the market tends to treat it that way; but the unshakeable fact is that in recent years it has almost always foreshadowed how the bourses have fared till the next Diwali.
After two years of blowout returns — over 40 per cent year-on-year leaps — the stuttering start to the new trading year is inauspicious with market pundits such as Rakesh Jhunjhunwala seeing a sharp correction in the near term even as they stress the need for a semblance of sanity in valuations.
“This market has seen some crazy valuations and so I would be a little circumspect going forward. I expect the market to correct before it begins to climb again,” Jhunjhunwala said.
“The signs are ominous...and it is time for introspection and retrospection,” said Arun Kejriwal, director of Kejriwal Research and Investment Services. “We need to look at the global markets, the crude oil prices and inflation.”
The market was reacting to a set of negative global cues: oil prices surging to $98 per barrel, a sharp fall in the value of the dollar, and Federal Reserve chief Ben Bernanke’s comment that the US economy was in for a hard time with no indication that he would trim interest rates at the next Fed meeting on December 11.
The 30-share benchmark index, which has been sliding since Monday, has fallen 3.5 per cent this week. Bank stocks were the worst hit, plunging more than 7.2 per cent during the week after the Bankex closed at 11007.95 on Monday. The metal and the IT indices have also slumped by 1.09 and 1.06 per cent, respectively.
“The market has only reacted to the ongoing negative sentiment on account of weak global cues. Dow Jones Futures were 112 points down today and that was a huge negative indicator for Indian investors,” said V.K. Sharma, head of research at Anagram Stock Broking.
“Our investors are only reacting to the weak global cues that hurt almost all the Asian benchmark indices. But we believe that after the unwinding of positions in the futures and options market on November 29, the market should witness some sustainability. Auto shares are being affected primarily because of steep rise in oil prices. We should see a volatile market next week,” said Manish Sonthalia of Motilal Oswal Financial Services Ltd.
In another development, the BSE today launched the BSE Power Index which consists of 14 stocks. It will track the performance of companies engaged in the business of generation, transmission, and distribution of electricity, companies providing power infrastructure, and manufacturers of power generation equipment.
The power index, with a base date of January 3, 2005, represents about 90 per cent of the market capitalisation of power sector companies that figure on the BSE-500 index. The total market capitalisation of the 14 shares is put at Rs 665,246.53 crore as on November 8.
The index will be calculated and disseminated on a real-time basis through BSE’s trading terminal BOLT and the BSE website.