CBDT measure triggers panic, sell-off in Indian Markets, Sensex registers biggest ever fall

Indian Share prices felt the gravitational pull today, with the markets falling like nine pins. CBDT has proposed some changes to the existing taxation laws and sought opinion from people on that. This accentuated the fear in the market which was already leveraged and looking for reasons to come down.

The 30-share BSE Sensex collapsed 826.38 points (6.7%), to close at 11391.43. The S&P CNX Nifty fell 246.20 points (6.77%), to close at 3388.90.

The BSE Sensex fell as many as 887.36 points during the day, and hit a low of 11,330.45. Today´s fall was the steepest ever experienced in a single trading session. The previous biggest fall happened on 17 May 2004 (Black Monday), when it lost 565 points on the back of a defeat of market-friendly National Democratic Alliance (NDA) government in the general elections. It had plunged as much as 842 points in intra-day trade on that day.

If there is no clarification from government or CBDT regarding taxation of FIIs, the markets might go down further tomorrow.

The markets have an action packed week with the indices nose-diving on Monday and Tuesday, but recovered smartly to close up by more than 300 points on Wednesday. But, the day of reckoning was today. The markets never showed any signs of recovery. The margins would have been triggered which could have led to further collapse. The markets were down by nearly 550 points in the afternoon. Towards closing markets fell further by another 300 points which led to panic. Most of the mid and small caps closed at the lower circuit. The weakness in most of the Asian markets suffered on prospects of a further rate hike in the United States also didn´t give any reason to recover.

The Indian markets have scaled new peaks without any substantial correction in between. The Sensex zoomed to hit a high of 12671.11 on May 11, 2006 from a low of 7,685.64 hit on 28 October 2005. The Sensex jumped 4985.47 points (64.87%) to a lifetime high of 12671.11 reached during intraday trading on 11 May 2006. Since then, the Sensex has shed 1279.68 points (10.1%) to current 11,391.43.

All stocks irrespective of the sector were hammered. Metal, cement and auto shares plunged along with the blue-chip stocks sharply. Out of 30 stocks in Sensex and 50 stocks in NIFTY, all of them closed in red.

Tata Steel was hammered after the company´s results failed to live up to the market expectations. The company reported 14% fall in Net profit for Q4 2005 - 2006. The company reported Rs.783 crores profit compared to Rs.909 Crores. The stock was hammered 10.92% to Rs.545.05 on a heavy volume of 9533768 shares. Sterlite Industries fell 16.88% to close at Rs.429.55, Hindalco lost 11.84% to Rs.192.10, Nalco closed lower by 11.57% to Rs.271.25 and Hindustan Zinc shed 8.59% to Rs.864.8.

Index heavyweight Reliance Industries plunged 7.58% to Rs.1004.7. A strong 9549377 shares changed hands in the counter on NSE. RIL has a higher weightage in both Sensex and NIFTY. The stock hit a high of Rs.1069.80 and low of Rs.992.50 during the day.

Car major Maruti Udyog closed lower by 10.09% at Rs.820.5, Tata Motors lost 8.75% to Rs.878.05, M&M closed at Rs.653.3 - down by 7.84%, Hero Honda closed lower at Rs.872.9 - down by 2.21% and Bajaj Auto closed lower by 8.08% at Rs.3004.95.

Some of the other major losers in NIFTY were VSNL (down 13.52%, Rs 407.55), MTNL (down 13.07%, Rs 173.9), ACC (down 12.01%, Rs.799.6), IPCL (down 11.4%, Rs.238.6), SAIL (down 10.73%, Rs.82.4), Tata Chemicals (down 10.48%, Rs.228), Reliance Energy (down 10.7%, Rs 536.4), Gujarat Ambuja Cement (down 9.89%, Rs.98), Dabur (down 9.62%, Rs.144.7), Bhel (down 8.82%, Rs.2118.30), ITC (down 6.44%, Rs.191.15), Hindustan Lever (down 6.24%, Rs.258.25), ONGC (down 6.46%, Rs 1349.2), Ranbaxy (down 6.18%, Rs.459.4), and ICICI Bank (down 5.16%, Rs.593.75).

Source : Equity Bulls

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