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Sensex plunges 678 points on reports of raise in STT

MUMBAI — The market declined sharply in late trade. NTPC, Bharat Heavy Electricals, ITC, and Reliance Energy were major losers from Sensex. All the sectoral indices on BSE were in red. Capital goods, banking, power, metal stocks were major losers. Market breadth was weak. Profit taking was witnessed across the board as mid-cap and small-cap counters faltered.

Data showing heavy FII sales on Tuesda, weighed on the market sentiment. The sentiment was also impacted by media reports that the government is considering raising the securities transaction tax (STT), with one of the options being increasing the ceiling to 0.5 per cent. Finance minister P Chidambaram could move an appropriate amendment to the Finance Act, 2007, in Parliament in the current winter session for raising STT, reports suggest.

Persistent worries about the impact of sub-prime mortgage defaults on US economy pulled stocks across Asia and Europe. The Japanese yen strengthened to a two-year high against the dollar and also gained against the euro as investors reversed carry trades, where they borrow yen to buy high-yielding but risky assets.

The 30-share BSE Sensex lost 678.18 points or 3.52 per cent at 18,602.62. At day's low of 18,515.30 Sensex had lost 765.50 points.

Foreign institutional investors (FIIs) were net sellers to the tune of Rs 4,201.14 crore in the futures & options segment on Tuesday.

According to data released by the NSE, FIIs were net sellers of index futures to the tune of Rs 2,897.67 crore and bought index options worth Rs 35.34 crore. They were net sellers of stock futures to the tune of Rs 1,334.46 crore and sold stock options worth Rs 4.36 crore.

FIIs sold shares worth Rs 1072.10 crore in the cash market on Tuesday, 20 November 2007. Domestic institutional investors (DIIs) were net buyers of shares worth Rs 463.95 crore on Tuesday, 20 November 2007, as per provisional data.

Index heavyweight and Indiaís largest private sector firm by market capitalisation Reliance Industries declined 2.33 per cent to Rs2,722. The stock came sharply off session's high of Rs2,800. As per reports, Reliance Industries (RIL) has signed production sharing agreement (PSA) for two exploratory blocks 34 and 37 located in the Jeza basin of eastern Yemen, taking its total number of overseas exploratory blocks to nine.

FMCG major ITC declined 5.95 per cent to Rs 184.85. As per reports it is preparing for a series of acquisitions to strengthen its food business, the fastest growing segment among the new businesses under its umbrella.

Banking majors declined sharply. ICICI Bank (down 5.5 per cent to Rs 1,003.10), HDFC Bank (down 2.98 per cent to Rs 1,583), and State Bank of India (down 5.48 per cent to Rs 2,154.65) edged lower.

Power stocks plunged. NTPC (down 8.03 per cent to Rs 239.50), Tata Power Company (down 4.76 per cent to Rs 1,159.25), Reliance Energy (down 5.65 per cent to Rs 1,692.85), PowerGrid Corporation of India (down 7.7 per cent to Rs 146.90) edged lower.

Capital goods stocks declined. Larsen & Toubro slipped 5.25 per cent to Rs 4,108.60 on BSE, after the company said on Tuesday it had signed an agreement with Raytheon for the US defence major's multi-role fighter jet programme, besides co-operation in defence projects. Bharat Heavy Electricals (down 6.33 per cent to Rs 2,486.10) and Suzlon Energy (down 6.66 per cent to Rs 1,905.05) were other losers from capital goods sector.

Metal stocks declined for the second day in a row due to falling global metal prices. Sterlite Industries (down 7.65 per cent to Rs 885.50), Hindalco Industries (down 4.94 per cent to Rs 184.55), Steel Authority of India (down 6.89 per cent to Rs 245.45) edged lower.

Tata Steel declined 4.37 per cent to Rs 822. As per reports, Riversdale Mining, Tata Steelís partner in Australia, has discovered around 1.2 billion tonnes of coal at northern Benga in the Moatize district of Mozambique which happens to be the worldís largest unexplored coal province.

IT stocks declined due to persistent worries about US economy. Wipro (down 2.7 per cent to Rs 436.55), Satyam Computer services (down 1.56 per cent to Rs 412), Infosys (down 1.04 per cent to Rs 1,548.10) and Tata Consultancy Services (down 1.25 per cent to Rs 948.50) edged lower.