Sensex closes below 17000; IT, Reliance weigh

MUMBAI: Indian equities ended a volatile session sharply lower Wednesday ahead of second quarter results. The correction was led by IT stocks and index heavyweight Reliance Industries.

Indices opened higher taking cues from positive global markets but could not breach earlier highs. Later, the indices turned choppy and slipped as the session progressed. A sharp fall in the last half hour took the indices below psychological levels.

“Some caution seems to have crept in ahead of earnings season. Bulls and bears are slugging it out around 5000 level. We have a stoploss of 4920 on Nifty (cash). Unless this level is broken decisively we remain bullish on the market,” said Shankar Char, vice president, Centrum Capital.

National Stock Exchange’s Nifty ended below the 5,000 mark. The index settled at 4,985.75, down 0.83 per cent or 41.65 points from the previous close. Nifty swayed between a high of 5,077.00 and low of 4,972.95.

Bombay Stock Exchange’s Sensex closed at 16,806.66, lower by 151.88 points or 0.9 per cent. The index slipped to a low of 16,764.07 after touching a high of 17,120.56 during the day.

The BSE Midcap Index closed 1.41 per cent higher and BSE Smallcap Index edged up 0.46 per cent.

Sectorwise, the BSE IT Index lost 2.74 per cent, BSE Oil & Gas Index shed 1.06 per cent and BSE Auto Index declined 1.03 per cent.

IT stocks were hit badly as traders resorted to booking profits following the decline in US dollar against the rupee. At 4:40 pm, the rupee was at 46.63 per dollar, after hitting an year-high of 46.49 against previous close of 46.89.

Index heavyweight Reliance Industries also kept the indices under pressure ahead of its second quarter results. However, brokerage Motilal Oswal in its results preview note has put a ‘Buy’ call on the stock. “RPL’s merger with RIL has been approved by the high court, with the appointed date being 1 April 2009. Hence, we have built RPL numbers in our quarterly estimates for FY10. For 2QFY10, we expect RIL to report net profit of Rs 38 billion (v/s Rs41.2b in 2QFY09 and Rs37.4b in 1QFY10).