RTTNews - The Indian market fell sharply on Wednesday, as investors choose to take profits amid concerns about stretched valuations in a tough economic environment. Even as overvalued frontline stocks came under significant selling pressure, the broader market, represented by small-caps and mid-caps, ended with handsome gains. The mid-cap index rallied 6.03% and the small-cap index jumped 8.86%. However, the broad-based BSE 500 index closed with a modest 0.71% gain.

Trading was largely sector-specific as investors shuffled their portfolios. The banking index fell 2.45% and the oil & gas index moved down 2.09%, but the consumer durable index surged up 9.69%, metal index rallied 5.22% and auto stocks jumped 4.70% on an average. While stocks in the public sector, healthcare, capital goods and power sectors showed notable gains, defensive FMCG stocks and the IT sector ended subdued.

After opening lower at 14,231, the BSE Sensex bounced back to a high of 14,406 in early trading. As selling intensified, the index has since then pared all its gains and fell to a low of 13,976 before finishing at 14,061, down 241 points or 1.69% from the previous close. Similarly, the S&P CNX went through a choppy trading before ending at 4,270, down 48 points or 1.11%. On the BSE, the market breadth was extremely positive, with advancers outnumbering decliners by 2389 to 300.

Among the major decliners, DLF plunged 7.77%, ICICI Bank plummeted 6.56%, Bharti Airtel slumped 6.06%, BHEL tumbled 5.75% and HDFC fell 5.73%. Sun Pharma, Reliance Industries, HDFC Bank, Reliance Communication, Infosys, ITC and Grasim Industries were the other prominent losers.

On the other hand, Tata Motors surged up nearly 20%, Tata Steel climbed 12.81%, Mahindra & Mahindra jumped 8.18%, Hindalco Industries rallied 7.09% and Jaiprakash Associates advanced 5.29%. Maruti Suzuki, Ranbaxy Laboratories, Reliance Infrastructure, ACC, Wipro, Hindustan Unilever and State Bank of India also showed notable gains.

Aviation stocks jumped on hopes that the new government would ease guidelines on foreign direct investment in the sector. Kingfisher climbed 27.36%, JetAirways rallied 13.81% and SpiceJet surged up 17.84%.

Unitech advanced 3.39% after Norway-based Telenor raised its stake in Unitech Wireless, the telecom unit of Unitech, to 49% by paying an additional Rs.1, 130 crore. Separately, reports suggest that its promoter group Chandra family is planning to raise its stake by 10% through an issue of convertible warrants.

Tata Steel jumped 12.81% on reports that it will not sell a stake in its Teeside cast products unit to Marcegaglia and Dongkuk after a consortium including the two cancelled a contract to buy the plant's output.

Tata Motors surged up 19.12% on reports that it sold bonds worth Rs.1250 crore to fund the acquisitions of a $1.9 billion loan taken for Jaguar and Land Rover acquisitions last year.

Jain Irrigation Systems rallied 7.57% on bagging orders worth Rs.65 crore from the Himachal Pradesh government. Indiabulls Real Estate rose 3.35% on reports that it raised $550 million through an institutional share placement at Rs.185 per share.

Several state-owned banks such as Allahabad Bank, Karnata Bank and Indian Overseas Bank closed sharply higher, as investors bet the new government would pursue financial sector reforms. Among top banks, State Bank of India ended up 1.47%, but private sector lender ICICI Bank tumbled 6.56%, Axis Bank fell 5.05% and HDFC Bank moved down 2.36%.

Pantaloon Retail surged up 10.70%, Lupin rallied 6.63% and Federal Bank advanced 2.85% following the execution of block deals on the Bombay Stock Exchange. Thermax soared 11.32% on better-than-expected quarterly results. For the 3 months ended March, the company's net profit rose to Rs.94.33 crore from Rs.80.53 crore in the year ago period.

Shipping stocks rallied after the global benchmark for freight rates of dry bulk carriers, the Baltic Dry index rose for a 13th straight session to a level not seen since 8 October 2008. Shipping Corporation of India jumped 9.86%, Essar Shipping climbed 8.52%, GE Shipping rallied 6.62% and Mercator Lines soared 11.33%.

Ruchi Soya Industries was locked at the 20% upper circuit limit after the company proposed to raise funds through a foreign institutional share placement at Rs.35 per share.

Stocks in the construction and infrastructure sectors such as GMR Infra, GVK Power, KEC International, Nagarjuna Construction and Gammon India ended sharply higher.

Cement and sugar stocks also rose sharply across the board.

Maruti Suzuki gained 4.45% on reports that it had invested Rs.4, 000 crore on its latest offering 'Ritz' and that it is planning at least three launches by 2011-12. Punj Lloyd jumped 12.86% on reports that it is exiting real estate business by selling its 50% stake in a joint venture company to Rampratha group.

Jindal Steel & Power added 3.86% after the NSE included the stock in the Nifty with effect from June 17, replacing Reliance Petro, pursuant to its merger with its promoter firm Reliance Industries. On the other hand, Reliance Petroleum closed down 2.96%. Grasim Industries fell 1.55% after reporting a 5% decline in its consolidated net profit for the fourth quarter ended March.

On the BSE, DLF topped the traded value with a total turnover of Rs.321.05 crore, followed by Tata Steel (Rs.316.15 crore), Reliance (Rs. 294.67), Unitech (Rs.271.60) and Reliance Capital (Rs.251.83 crore).

Cals Refineries topped the traded volume with trades of 72.77 million, followed by Unitech (36.78 million), Reliance Natural Resources (30.32 million), Ispat (26.89 million) and Kashyap Technologies (21.26 million).

Elsewhere, trading was mixed across the other Asian markets, as higher metal and oil prices weighed on sentiment. While the markets in China, Hong Kong, and Indonesia ended in the red, markets in Japan, South Korea, Singapore and Taiwan closed in positive territory with gains ranging between 0.22% and 0.72% from their previous close.

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