Politics plays spoilsport in markets, Sensex down 147 pts

The Sensex today suffered the fortnight's biggest fall of 147 points as investors adopted a cautious stance amid political uncertainty casting a shadow on the government's new reformist measures like FDI in retail.

Resuming trade after a day's break, Sensex fell over 200 points at the outset as UPA ally Trinamool Congress announced withdrawal of support on Tuesday dampening sentiment.

The Sensex staged a brief recovery even as a cross sections of political parties were observing a nation wide band against reform steps. UPA's outside supporter SP's chief Mulayam Singh Yadav's comment that his party will not "tolerate" "anti-people" decisions.

The BSE benchmark index finally ended the day 147 points lower at its one-week low of 18,349.25.

The government had unveiled last week big-bang reforms by opting to hike diesel prices after more than a year and allowing FDI in aviation and retail, that saw Sensex surging by 443 points on September 14.

Global cues also soured domestic market activity after reports that China's manufacturing industry will contract for 11th month. Asian markets closed 1-2% down while Europe was also trading lower in afternoon deals.

The 50-share NSE index dropped by 45.80 points to 5,554.25, after touching a day's low of 5,534.90.

"After weak Chinese data, investors again opted to book profits in the one of the strongest rallies witnessed recently. Political derangement soured sentiments," said Nidhi Sarswat, Senior Research Analyst, Bonanza Portfolio.

A sharp fall in RIL, ICICI Bank and HDFC together contributed over 100 points in Sensex's fall while L&T, SBI, Tata Steel, CIL, BHEL, GAIL and M&M also witnessed selling.

ITC, TCS, Infosys, Bajaj Auto and ONGC, however, notched handsome gains, restricting the fall to some extent.

"IT stocks rose as the bounce back in US dollar rates is helping them rise. TCS, Wipro and Infosys all closed higher," said Nagji K Rita, CMD, Inventure Growth & Securities.

Asian stocks closed weak after Japanese exports dropped for the third month and also lacklustre Chinese manufacturing data. Key indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan ended lower between 0.42-2.08%.

European markets also were trading bearish in their afternoon deals after the latest purchasing managers's index (PMI) data for the Eurozone showed slowdown in business activity. The CAC (France) was down by 0.80%, the DAX (Germany) by 0.45% and the FTSE (UK) by 0.61%.

Kishor P Ostwal, CMD, CNI Research Ltd said, "Market will remain in correction mode till expiry. Political developments will weigh on the market."

Out of the 30-share Sensex, 20 scrips registered losses while 10 counters finished with gains. Major losers from the Sensex were BHEL (3.62%), Gail India (3.58%), Coal India (2.99%), Sterlite Ind (2.80%), Tata Steel (2.73%), Reliance Ind (2.70%) and ICICI Bank (2.52%).

L&T (1.97%), HDFC (1.87%), M&M (1.60%), Hero MotoCorp (1.56%), SBI (1.36%), NTPC (1.32%), Cipla (1.19%) and Jindal Steel (1%) also ended lower.

Among gainers, Bajaj Auto rose by 2.31%, followed by TCS (1.62%) and ONGC (1.21%).

Among the sectoral indices, BSE-Metal dropped by 2.28%, followed by BSE-CG (1.94%), BSE-Power (1.63%), BSE-Oil&Gas (1.43%), Bankex (1.10%) and BSE-PSU (1.05%).

The market breadth turned negative as 1,590 stocks ended with losses while 1,204 stocks finished with gains. The total turnover dropped further to Rs 2,048.27 crore from Rs 2,582.28 crore on Tuesday.

Meanwhile, FIIs continued to make heavy purchases with a net Rs1,049.18 crore being pumped on September 18 as per the provisional data from bourses.