Sensex plunges by 324 points, banking, consumer goods hit

Vanquishing the euphoria over a stable UPA government, weak global cues and profit-booking brought the benchmark Sensex on BSE down by over hefty 320 points on Thursday amid worries that the market will be volatile and may test the lower end in the coming days.

Led by a fall in banking and capital goods shares, the 30- share index on the Bombay Stock Exchange closed below psychologically important 14K-level at 13,736.54, lower by 324.12 points, or 2.31 per cent.

The National Stock Exchange's 50-share Nifty dropped by 59.40 points, or 1.39 per cent, to close at 4,210.90.

Marketmen said a sharp fall in European markets adversely impacted the market in late afternoon trade. European bourses were down 1.70 per cent to 2.36 per cent in early trade.

"It was correction induced by profit-booking," said Bonanza Portfolio Assistant vice president Avinash Gupta, adding that going forward the market is expected to be volatile and may test the lower end.

Stocks of oil companies escaped the selling pressure while banking and capital goods shares were battered.

"In today's market, the exception was the oil sector PSU's. This was on account of appreciation that the there could be deregulation of oil and petroleum products. This could reduce subsidy burden enabling companies to generate resources to pursue the growth," Gupta said.

ONGC, BPCL, IOC and HPCL notched up smart gains in the range of 8-15 per cent. 

Inflation rising to 0.61 per cent for the week ended May 9 from 0.48 per cent in the previous week also added to selling pressure.

According to provisional figures on NSE, FIIs sold shares worth Rs 985.53 crore in equities as on May 20.

Engineering giant L&T fell by a sharp 8.59 per cent while Maruti Suzuki declined 6.93 per cent.

Among other major losers, India's largest private sector lender ICICI Bank was down 5.15 per cent, HDFC 5.01 per cent, Hindalco 5.00 per cent, Wipro 4.86 per cent, TCS 4.25 per cent Mah & Mah 3.75 per cent and BHEL 3.73 per cent.

However, Reliance Comm spurted 4.52 per cent, Ranbaxy 2.66 per cent, NTPC 1.87 per cent and Rel Infra 1.36 per cent.

Barring PSU, oil & gas and consumer durable indices, all others closed in the red. The BSE PSU index gained 2.75 per cent as key components ONGC rose by 8.41 per cent, HPCL 14.64 per cent, MMTC 15.08 per cent and BPCL 10.22 per cent.

Brokers said maket participants anticipate the new government to pursue disinvestments of state-run undertakings, leading buying interest in shares of state-run companies.

The business volume dropped to Rs 7.996.10 crore from Rs 8,415.09 crore on Tuesday. Housing Development and Infrastructure Ltd (HDIL) recorded the highest turnover of Rs 277.96 crore followed by ICICI Bank (Rs 242.20 crore).

The market breadth was extremely bullish with 2,097 gainers as the small cap stocks witnessed a sharp rally. 

A rise of over eight per cent in the Nifty heavyweight ONGC helped mitigate some of the losses in NSE's key index.

The BSE Smallcap index pared early gains but still ended with impressive gains of 2.58 per cent on sustained buying interest in the segment while the Midcap closed flat.