Sensex crashes by 121.04 pts, closes at 14,090.92 pts

Mumbai, Jan 31: The Sensex today crashed by 121.04 points and closed in the red at 14,090.92 on the Bombay Stock Exchange on sustained heavy selling pressure by Foreign Institutional Investors (FII's) and mutual funds.

The market was extremely volatile throughout the session. A hawkish stance taken by the RBI during the review of its annual monetary policy and the Federal Reserve's meeting scheduled later today, soured the mood on the bourses.

The statement, which was very much on expected lines, left the cash reserve ratio (CRR) and reverse repo rate unchanged at 5.5 per cent and 6 per cent, respectively. The RBI has also kept the bank rate unchanged at 6 per cent.

The central bank said its monetary stance will be to ensure price stability and anchor inflation expectations. The RBI said its objective is to bring inflation as close as possible to 5.0-5.5 per cent. RBI's Governor Y V Reddy reiterated RBI's committment to adapt to evolving global and domestic situations, which impact inflation and growth.

The government on Wednesday revised upwards its 2005/06 gross domestic product growth estimate to 9 per cent from an earlier 8.4 per cent. Manufacturing output growth was revised to 9.1 per cent for the year to March 2006, from the earlier 9 per cent. Growth in farm output for 2005/06 was pegged at 6 per cent compared to an earlier estimate of 3.9 per cent.

Even the Federal Reserve officials meet later today, and may leave the overnight lending rate unchanged at 5.25 per cent. Fed officials say controlling inflation is a priority than preventing any possible economic weakness.

The 30-shares BSE Sensex lost 121.04 points or 0.85 per cent, to 14,090.92.It had opened higher, at 14,219.38, and surged to a high of 14,269.31 in early trade. The benchmark index had also plunged to a low of 14,045.61. It fluctuated at a sharp 223.70 points for the day.

The BSE METAL and CG indices also plunged sharply by 476.44 points and 134.78 points respectively. They closed low at 9283.17 points for METAL index and for CG index at 9485.79 points, followed by OIL&GAS index by 85.66 points and touched 6631.02 points, SML CAP index by 73.01 points and quoted at 7503.50 points, PSU index by 70.04 points and touched 6300.35 points, MID CAP index by 55.76 points and quoted at 6045.10 points, AUTO index by 46.31 points and closed at 5515.36 points and BANKEX index by 32.69 points and closed at 7260.09 points.

The S&P CNX Nifty was down around 42 points or 1.01 per cent, to end at 4,082.70 before it resumed flat at 4123.85 points. The Nifty index recorded the day's high at 4137.85 points and a low at 4068.55 points.

The market-breadth ended negative as small-cap and mid-cap stocks remained under pressure. For 1,706 shares declining, 939 advanced and 43 remained unchanged. The total turnover on BSE amounted to Rs 5099 crore. Among the 30-Sensex pack, 19 declined while the rest advanced.

The Nikkei was down by 106.77 points, at 17,383.42. The Dow Jones industrial average rose by 32.53 points, or 0.26 per cent, to end at 12,523.31. The Standard&Poor's 500 Index added 8.20 points, or 0.58 per cent, to finish at 1,428.82.

The Nasdaq Composite Index gained 7.55 points, or 0.31 per cent, to close at 2,448.64.

Oil notched up its biggest gain in 16 months on Tuesday, as funds poured fresh cash into the market because of cold US weather and OPEC supply cuts. US crude was trading at USD 56.71 a barrel early on Wednesday, brokers said.

Tata Steel was the top loser in the Sensex. The scrip plunged by 11.10 per cent to Rs 461.80, on high volumes of 58.66 lakh shares. The stock also plunged to a low of Rs 461.10, down from the day's high of Rs 510.

Tata Steel has offered Corus' investors 608 pence per share in cash, topping a final bid of 603 pence from Brazilian Companhia Siderurgica Nacional (CSN). The 608 pence per share that Tata Steel will pay values Corus at around seven times its forecast of earnings before interest, tax, depreciation and amortisation (EBITDA) for 2006, well above the multiple Mittal Steel paid for Arcelor. Mittal Steel had paid 4.6 times the latter's historic EBITDA.

Index heavyweight Reliance Industries (RIL) was down 1.52 per ncent to Rs 1360.75. It had advanced to a high of Rs 1390. As many as 11.82 lakh shares changed hands in the RIL counter.

Hindalco (down 3.24 per cent to Rs 174.85), HLL (down 3 per cent to Rs 207.45) and Wipro (down 2.66 per cent to Rs 614), were the other losers.

Cement maker Gujarat Ambuja Cements was the top gainer, up by 1.78 per cent to Rs 137, as 12.56 lakh shares changed hands on BSE.

Reliance Energy (REL) gained 1.60 per cent to Rs 514, on a volume of 5.26 lakh shares. REL has bagged power projects worth about Rs 4,150 crore in Haryana and Uttar Pradesh.

The Haryana Power Generation Coporation awarded a contract for two units of 600 Mw each on a turnkey basis to REL. The Rs 3,763 crore project will be executed by the company's Engineering, Procurement and Construction (EPC) division.

ITC rose by 0.93 per cent to Rs 174, after reporting 33.6 per cent growth in net profit in the December 2006 quarter to Rs 717.40 crore, from Rs 536.83 crore during the year ago period. The net profit was at the top end of analysts' expectations. Net sales rose by 23.8 per cent to Rs 3165.57 crore (Rs 2556.04 crore), which was also in line with estimates, brockers added.

UNI