Sensex sheds 395 points on profit selling

The market had made a sharp recovery from lower level in mid-afternoon trade from initial fall but the recovery proved short-lived and the market soon weakened again. Reliance Industries declined sharply from day's high. Most of the sectoral indices slipped into the red. European markets, which opened after Indian markets, were weak. Asian markets, which opened before Indian market, were subdued to weak.

The BSE 30-share Sensex ended down 395.03 points, or 2.1 per cent, to 18,419.04. It hit a intraday low of 18,336 in late trade. At day's low of 18,336, Sensex had declined 478.07 points for the day.

The Sensex had surged 1,323 points in last three trading sessions till Thursday.

The market had witnessed a recovery from lower level in early afternoon trade from an initial slide as political worries eased after Congress president Sonia Gandhi reiterated that she does not want early election. India's index of industrial production (IIP) data showed healthly growth in August 2007. Inflation eased a little bit. Both IIP and inflation data hit the market in early afternoon trade yesterday. Mid-cap and small-cap indices outperformed Sensex. Finance Minister P. Chidambaram yesterday said the economy can sustain a growth rate of 9 per cent, but the growth may dip below 9 per cent in case of some turbulence. Chidambaram said the steep rise in stock markets is cause for concern. The rally is being driven by large inflows of overseas funds, and the markets may cool down after some time, he added.

India's industrial output in August 2007 rose 10.7 per cent from a year earlier, higher than upwardly revised annual growth of 7.5 per cent in July 2007 due to mining, manufacturing and electricity production, data released by the government showed on Friday, 12 October 2007.

Manufacturing production rose 10.4 per cent in August 2007 from a year earlier, compared with provisional annual growth of 7.2 per cent in July 2007.

Elections are still far away and the government has one-and-a-half years to complete, Prime Minister Manmohan Singh said yesterday. The prime minister said if the India-United States civil nuclear deal does not come through, it will be a disappointment.

India's wholesale price index (WPI) rose 3.26 per cent in the 12 months to 29 September 2007, lower than the previous week's 3.42 per cent rise, government data released yesterday showed.

Capital goods stocks declined sharply in late trade. L&T (down 3.61 per cent to Rs3,360.75), Bhel (down 3.3 per cent to Rs2,341.35) and Suzlon Energy (down 4.5 per cent to Rs1,698.10) edged lower. BSE Capital Good index was the major loser from the sectoral indices on BSE.

Realty stocks witnessed heavy selling. DLF (down 5.76 per cent to Rs865.65), Indiabulls Real Estate (down 2.7 per cent to Rs634.85) and Unitech (down 0.77 per cent to Rs 339.85) edged lower. BSE Realty index was the second highest loser from sectoral indices on BSE.

Banking stocks lost ground as strong IIP data for August 2007 dashed hopes of a near term rate cut by RBI. ICICI Bank (down 3.37 per cent to Rs1,053), State Bank of India (down 4.23 per cent to Rs1,862.30) and HDFC Bank (down 1.76 per cent to Rs 1,430.85) edged lower.

Auto stocks declined. Tata Motors (down 3.41 per cent to Rs802.10), Bajaj Auto (down 2.96 per cent to Rs2,542.30), Maruti Suzuki India (down 1.95 per cent to Rs1,096.80) edged lower.

Cipla declined 3.3 per cent to Rs184.75.