Sensex dips 220 points on mining bill; off 9-week high of 19,000

The Bombay Stock Exchange (BSE) Sensex tumbled from over nine-week high today to below 19,000 at 18,858, down 220 points amid profit booking in blue chips and a heavy sell-off in metals and mining firms as a new bill proposed profit-sharing with people affected by their projects.

Besides, sentiment dampened as investors viewed HDFC Bank Q1 result as below-expected and RIL stock, which carries the heaviest weight on the Sensex, slid on being assigned "equal weight" from "overweight" by Morgan Stanley, analysts said.

ICICI Bank, ITC, TCS, L&T, HDFC, Sterlite, Hindalco, Infosys, Jindal Steel and Tata Steel weighed down the market.

The BSE 30-stock barometer initially touched a 9-1/2-week high of 19,131.70 but fell back to end the day at 18,858.04, a steep fall of 220.26 points or 1.15 per cent. Yesterday, it had gained 351.33 points or 1.88 per cent.

Similarly, the NSE 50-issue Nifty reacted downwards by 68.30 points or 1.19 per cent to 5,660.65.

"The approval of the draft mining bill acted as negative trigger for the mining sector which alongwith itself dragged the broader market down," Stock Brokers Research head Paras Bothra said.

The draft Mines and Mineral Development and Regulation (MMDR) Bill, 2011, has proposed to make it mandatory for coal miners to share 26 per cent of their profits, while companies mining other resources will be required to pay 100 per cent of the royalty on their production to project-affected people.

The total annual burden on miners on account such a move has been estimated at around Rs11,000. This could erode revenue of miners and also would impact their profitability.

Some weakness in European stocks at mid-session also added to the sell-off. CNI Research CMD Kishore Ostwal said, "Downgrading of the top heavyweight Reliance Industries (RIL) by Morgan Stanley forced investors to get little bit cautious at the current higher levels." RIL, which has over 10 per cent weight in the Sensex, fell nearly 2 per cent.

Meanwhile, the BSE-Metals index, a big drag on the markets, dipped 2.99 per cent. CIL plunged 8.18 per cent, Hind Zinc (4.24 per cent), Sesa Goa (4.17 per cent), Sterlite (3.94 per cent), Hindalco (3.73 per cent), SAIL (3.66 per cent), JSW Steel (3.09 per cent), NMDC (2.55 per cent), Jindal Steel (2.54 per cent), Tata Steel (1.97 per cent), Nalco (1.75 per cent), Ashapura Minechem (4.24 per cent) and GMDC (2.22 per cent).

However, overall, FIIs remained net buyers and they pumped in Rs750 crore as per SEBI data.

Globally, among key indices from Asia China, Hong Kong, Japan and Singapore ended in the green, while Taiwan and South Korea closed in the red.

European markets too were trading in tight range in the afternoon after the European Central Bank raised interest rates by a quarter of a percentage.

Back home, some of the realty stocks attracted good buying support, with BSE-Realty index spurting 2.08 per cent -- the only gainer from the 13 sectoral indices. But, BSE-PSU fell 1.72 per cent, FMCG (1.14 per cent), Oil & Gas  (1.13 per cent) and Bankex (1.11 per cent).

In all, 22 out of 30 Sensex-based stocks ended with losses, while other finished with gains. Losers included Jaipra Asso (3.04 per cent), ICICI Bank (2.71 per cent), TCS (2.05 per cent), RIL (1.83 per cent), Tata Power (1.80 per cent), HDFC (1.49 per cent), L&T (1.40 per cent), ITC (1.38 per cent) and Infosys (0.58 per cent).

The total market breadth at BSE turned negative as 1,757 counters ended with falls, while 1,127 settled with gains. The total turnover was relatively low at Rs3,214.40 crore from Rs3,493.58 crore yesterday.