Realty shares hammered as Sensex falls further

Mumbai: Key benchmarks fell for the fourth successive session on Wednesday, as concerns over the continuity of policy reforms and a slowing economy kept buyers at bay. The 30-share BSE Sensex fell 123.91 points to close at 18884.19. With this, the index has shed 686 points in the last four sessions.

The 50-share Nifty closed at 5694.40, down 51.55 points over its previous close. The index has fallen 214 points in the last four sessions.

The fall was far more bruising in midcaps and small caps, which have been hit by a renewed wave of sell-off over the last week. A slowdown in foreign fund flows and dismal corporate earnings had already reigned in the upsurge in stock prices of late; the latest bout of political uncertainty has deepened the sense of gloom.

"We do not see any immediate threat to the stability of the Government at the Centre but note that political uncertainty may make the reforms process more difficult," Kotak Securities wrote in its note to clients. Bharti Airtel led losers among frontline shares following the latest twist in the 2G spectrum allocation case, falling 4 per cent. Other key losers included NTPC, ICICI Bank, ONGC and SBI, down 3-4 percent.

"Our cautious stance on Indian equities since late January has been premised on expectations that 1) the slowdown in the economy is sharper than street estimates 2) the window of opportunity for reforms could likely narrow given the substantial election calendar over the next 12-14 months," said a strategy note by brokerage house JP Morgan.

Realty shares were the worst performers, with HDIL leading losers. The stock crashed 20 per cent after rating agency CARE cut the ratings of the company's bonds.

Opto Circuits, Educomp, Bilcare, Manappuram Finance and Delta Corp were big losers in the midcap space, with the stocks plunging between 10-20 per cent. The RBI cut the benchmark repo rate by 25 basis points on Tuesday, but the market has been indifferent to it.

"We believe policy rate cuts will likely not be effective until we see meaningful deceleration in CPI (consumer price index) inflation and improvement in deposit growth," brokerage house Morgan Stanley wrote in its note to clients.