Profit-taking? Sensex dips once again | business | Hindustan Times
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Profit-taking? Sensex dips once again

business Updated: Jul 08, 2009 21:25 IST
HT Correspondent

The Bombay Stock Exchange’s 30-share sensitive index, Sensex, fell to its lowest since May 26 on Wednesday as volatility gripped the market after 2009-10 budget announcements missed expectations.

“The market seems to be using the ‘budget let down’ to book profit. While the budget was not bad, it was below market expectation,” said Hitesh Agrawal, research head, Angel Trading.

Sukumar Rajah, chief investment officer and director of Franklin Templeton India, said the market would continue to be volatile but it would be lower compared to 2008. “While markets are witnessing volatility, it does not dissuade people with long-term investment goals from flocking to India, a good place for such investments.”

The Sensex dropped 401 points, or 2.8 per cent, to 13,768 on Wednesday. The National Stock Exchange’s Nifty closed 2.93 per cent lower at 4,078. Major sectoral losers include metals, capital goods, real estate and banking. Commodity stocks also fell on falling metal prices. Shares of Tata Steel, the country’s largest steel maker, fell 8.6 per cent and Sterlite Industries, the country’s largest copper producer, dropped 8.2 per cent.

However, the price-to-earnings ratio is below 14 times and the fair value suggests that it sould be anything between 15 times and 16 times. “The PE is below fair valuation,” said Angel’s Agrawal. “Markets had factored in a 7 per cent fiscal deficit and 6.8 per cent estimated in the budget did not come as a surprise.”

“In the last few years, India and China have been in a situation that Europe was in the late 1990s. Therefore, the interest is only going to increase in these countries,” said Franklin’s Rajah.