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Equities ease amid choppy trade; Sensex down 194 points

MUMBAI — The market plunged deep in red in late trade in what was a choppy trade yesterday. Earlier, the market had staged a solid recovery after an initial fall in early afternoon trade that was triggered by the Reserve Bank of India's raising cash reserve ratio (CRR) by a steep 50 basis points to 7.5 per cent, at its mid-term review of the annual monetary policy announced at 12:00 IST yesterday.

RBI kept interest rates unchanged. Contrary to some expectations, interest rates may not soften in the near term.

Auto, banking and IT stocks were weak. Capital goods, metal stocks gained. Reliance Industries lost ground. Market breadth was negative. Most of the Asian markets were trading lower. European markets were subdued.

BSE Sensex ended down 194.16 points or 0.97 per cent to 19,783.51. It opened on a strong note with an upward gap of 125.77 points at 20,103.44 and soon rose to strike an all-time high of 20,238.16 in early trade. At day's high of 20,238.16, Sensex had gained 260.49 points.

Sensex hit a low of 19,694.85 in late trade. At day's low of 19,694.85, Sensex had declined 282.82 points. Sensex oscillated 543.31 points between a low of 19,694.85 and high of 20,238.16.

ONGC, Bharat Heavy Electricals, Larsen & Toubro and HDFC hit all time highs yesterday. The central bank raised the proportion of cash banks have to keep with it on deposit by 50 basis points to 7.5 per cent yesterday to mop up excess funds, but kept its key lending rates unchanged. The central bank left the reverse repo rate, the rate at which it absorbs excess cash from banks, unchanged at 6 per cent. The bank rate, too, was unchanged at 6 per cent.

Auto stocks declined sharply. Mahindra & Mahindra (down 7 per cent to Rs740.60), Maruti Suzuki India (down 8.46 per cent to Rs1,087.95), Hero Honda Motors (down 2.61per cent to Rs724.95), Tata Motors (down 4.93 per cent to Rs767.30) and Bajaj Auto (down 0.6 per cent to Rs 2,487.05) edged lower.

Banking majors declined as the Reserve Bank of India raised CRR by a steep 50 basis points to 7.5 per cent, in a bid to suck out excess liquidity in the banking system. ICICI Bank (down 0.73 per cent to Rs1,240.25) and HDFC Bank (down 1.25 per cent to Rs1,618.25) and State Bank of India (down 2.63 per cent to Rs2,062.20) edged lower. CRR deposits with the RBI earn zero interest for banks.

IT majors edged lower. Infosys (down 0.5per cent to Rs1,851.30), Tata Consultancy Services (down 1.86 per cent to Rs1,048.50) , Satyam Computer Services (down 0.64 per cent to Rs479.45) edged lower. Wipro (up 0.01 per cent to Rs509.70) edged higher.

India's largest telecom services provider Bharti Airtel (up 0.51per cent to Rs999.75) edged higher. Dr.Reddy's Laboratories rose 0.61per cent to Rs 615.45.

India's second biggest power utility in terms of revenue Reliance Energy (REL) was up nearly 3.91per cent to Rs 1,789.20 and was the top gainer from Sensex pack. REL said yesterday that it will transfer its road, rail, real estate and other infrastructure projects to a separate unit.

India's largest private sector entity by market capitalisation and oil refiner Reliance Industries (RIL) declined 2.02 per cent to Rs2,770.50. It hit a low of Rs2,746.

Capital goods stocks extended gains. Bharat Heavy Electricals (Bhel) rose 1.63per cent to Rs2,654.55. It hit an all time high of Rs 2,750 yesterday. Net profit of Bharat Heavy Electricals (Bhel) rose 91.01per cent to Rs 687.66 crore on 18.68 per cent rise in total income to Rs 3965.36 crore in Q2 September 2007 over Q2 September 2006. The company announced the results after the market hours on 29 October 2007.

India's biggest engineering & construction firm by revenue Larsen & Toubro rose 1.06 per cent to Rs4,323. It hit an all time high of Rs4,470 today. Suzlon Energy however declined 0.87per cent to Rs1,980.45.

Housing Development Finance Corporation, India's biggest dedicated housing finance firm, declined 2.02 per cent to Rs2,756.25. It hit an all time high of Rs2,965 yesterday. Net profit of Housing Development Finance Corporation rose 75.64 per cent to Rs646.39 crore on 30.54 per cent rise in total income to Rs1888.60 crore in Q2 September 2007 over Q2 September 2006. The company announced the results after the market hours on 29 October 2007.