Sensex slips over 240 points as elections enter final lap

The 30-share market barometer opened lower at 12,092.97 and touched the day's high of 12,180.07 during the morning session before beginning its slide, triggered by profit taking by jittery investors who are bracing for a fractured mandate on May 16 when the national elections result will be announced.

During the afternoon session, the Sensex slipped to the day's low of 11,765.06 but rallied briefly towards the closing session and finally settled at 11,876.43.

Despite Friday's decline, the prime index added 4.29 percent during the week and is up 21.44 this year, after slumping nearly 52 percent in 2008, a year marked by economic downturn, credit squeeze, rising inflation and high global crude prices.

Only four components could notch gains on Friday even as the losing pack was led by technology outsourcer Wipro, which fell 6.59 percent to close down at Rs.355.

Bigger rival Infosys Technologies sank 2.14 percent.

Financial majors ICICI Bank, HDFC, State Bank of India and HDFC Bank plunged 5.19 percent, 4.19 percent, 3.06 percent and 2.83 percent respectively.

Utility majors Reliance Infrastructure, NTPC and Tata Power tumbled 5.07 percent, 1.09 percent and 1.06 percent respectively.

Aluminium producers Sterlite Industries and Hindalco Industries fell 4.93 percent and 2.71 percent respectively.

Auto majors Mahindra & Mahindra, Tata Motors and Maruti Suzuki declined 4.28 percent, 1.36 percent and 1.10 percent respectively.

Telecom majors Reliance Communications and Bharti Airtel slipped 4.11 percent and 1.39 percent respectively.

Other major losers were Tata Steel (down 4.03 percent), ACC (down 3.55 percent) and BHEL (down 3.44 percent).

The biggest gainer of the day was Jaiprakash Associates, which jumped 2.53 percent to close up at Rs.142.10.

FMCG major Hindustan Unilever rose 0.98 percent.

Other gainers were Larsen & Toubro (up 0.42 percent) and Grasim Industries (up 0.03 percent).

All the sectoral indices except Consumer Durables (up 1.89 percent) closed in the negative. The biggest losers were Bankex (down 3.21 percent), Metal (down 2.52 percent) and IT (down 2.15 percent).

The BSE Midcap index fell 0.17 percent to close down at 3770.42 while the Smallcap index gained 0.32 percent to close up at 4277.26.

In the broader section, gainers marginally led losers 1,275 to 1,271 on relatively heavy volume of 515.7 million shares.

Elsewhere, the broader 50-share S&P CNX Nifty index of the National Stock Exchange (NSE) fell 1.72 percent or 63.20 points to close down at 3620.70.

According to the market analysts, the bullish market hit a speed breaker on Friday due to heightened concerns about the outcome of the month-long national elections, which ends on May 13.

Surveys indicate the result, due on May 16, could produce a fractured mandate with neither the Congress-led ruling coalition or the main opposition Bharatiya Janata Party-led group winning a majority on its own.

"The market needs to take a breather after such a long run up," said Avinash Gupta, assistant vice president of equity research at Bonanza Portfolio Ltd. "We don't see much upside to the market until the election results are announced."

"I don't think the market is going to move up so much from now. Everyone is somewhat confused with what might happen next week when the election results are announced," said Sanjeev Prasad, co-head of institutional equities at Kotak Securities.

"A close scrutiny of ground level facts enforce us to subscribe that a major party or coalition is not ensured of getting a comfortable majority," said Kapil Yadav, analyst at Dolat Capital, in a note to clients.

"While the market has its own favorites - it does not decide the government or its policy - it can only react," he said.

"An unstable government would add to the uncertainties in the market and the Sensex may move down by 1500 to 2000 points. If there is a stable government, we will see the index more than doubling by the end of FY 2010," said Arun Kejriwal, director of investment advisory firm KRIS.

"A consensus is emerging that there is very little trigger left for the market to move up," said Ambareesh Baliga, vice president at Karvy Stock Broking.

According to Baliga, till the election results are out, all eyes will be on foreign funds, which are seen as the main drivers of market rally.

"A correction was inevitable considering the run-up in the past couple of months," said Ajay Parmar, research head at Emkay Share & Stock Brokers. "But the heartening aspect is that institutional investors have been steady buyers."

Agrees Rajesh Jain, vice president at SMC Global. "FIIs would continue investing in the Indian market till they hear some bad news from their home market. As of now the economy there is somewhat stabilizing and FIIs would continue to invest in India," Jain said.

Foreign funds, which sold $13.3 billion of Indian equities in 2008 and dragged shares down by more than half, led the buying in April, pumping in more than $1.7 billion, their biggest inflow since October 2007.

"There is a great amount of money coming into India as they believe one of the two main parties will succeed in heading a relatively stable coalition," said Gajendra Nagpal, CEO of Unicon Financial Intermediaries.

"The world is awash with liquidity, and it is no great fun sitting on cash," Bonanza Portfolio's Gupta added. "The market is seeing more interest from retail investors as well."

Elsewhere in Asia, the markets closed in the green as growing confidence about the global economy bolstered investor appetite across Asia.

Japan's Nikkei 225 rose 0.50 percent to 9432.83; Hong Kong's Hang Seng advanced 1 percent to 17,389.87; China's Shanghai Composite jumped 1.09 percent to 2625.64; Taiwan's Taiex climbed 0.17 percent to 6583.87; and South Korea's Kospi gained 0.72 percent to 2915.38. However, bucking the trend, Singapore's Straits Times eased 0.15 percent to 2238.21.