Weak trade continues on Dalal Street; Nifty below 4,700 level

Indian equities continued its lackadaisical trade below neutral line in the late afternoon session in absence of buying due to lack of any positive upside trigger. High volatility is expected on the bourses ahead of settlement which is scheduled for tomorrow as traders are expected to roll over positions in the futures & options (F&O) segment from the near-month December, 2011, series to January, 2012, series. Investors were reluctant to pick front line stocks as the Asian peers too are exhibiting gloomy trends after disappointing Japanese industrial production and South Korean manufacturers’ confidence data underscored the fact that the global economic recovery still remains uncertain and fragile. Traders were seen piling up position in IT sector while selling was witnessed in Bankex, Metal and Realty sector.

SBI, Axis Bank, PNB, ICICI Bank, Kotak Bank and HDFC Bank from Banking space were seen trading with cut of around more than one percent to four percent putting pressure on the markets. Jindal Steel, Hindalco, Sterlite, Tata Steel, Sesa Goa and SAIL from Metal sector were down exerting pressure on the market. Industry heavyweight RIL is down with a cut of around more than one and half percent drifting the markets lower. HUL and ITC from FMCG pack was trading weak in red with cut of around more than one percent pulling markets down. However, NTPC, Infosys, BHEL, Tata Power and Coal India were trading firm in green pushing the markets up.

On the global front, all Asian markets traded in red while the European markets were too trading in red on pessimistic mood. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 4,700 and 15,700 levels, respectively. The market breadth on BSE was in favor of declines in the ratio of 919:1614 while 128 scrips remained unchanged.

The BSE Sensex is currently trading at 15,679.43 down by 194.52 points or 1.23% after trading as high as 15,887.80 and as low as 15,666.46. There were 7 stocks advancing against 23 declines on the index.

The broader indices were trading on a pessimistic note; the BSE Mid cap index plunged 1.27% while Small cap sank 0.96%.

On the BSE sectoral space, IT up 0.045 was the sole gainers while Bankex down 2.58%, Metal down 2.55%, Realty down 1.91%, Oil & Gas down 1.61% and Auto down 1.46% were the major losers in the space.

NTPC up 1.31%, Tata Power up 1.16%, Infosys up 0.81%, BHEL up 0.71% and Cipla up 0.09% were the major gainers on the Sensex, while Jindal Steel down 6.93%, ICICI Bank down 3.97%, Hindalco down 2.97%, Sterlite Industries down 2.68% and SBI down 2.34% were the major losers in the index.

Meanwhile, in its bid to inject liquidity in the economy, the Reserve Bank of India (RBI) has decided to purchase government securities worth Rs 12,000 crore on December 29, 2011. The central bank will conduct open market operations (OMO) for purchasing the securities through multi-security auction using the multiple price method, the apex bank said in a statement.

The move by RBI is consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions. The apex bank, in its mid quarter monetary policy review on December 16, 2011, had stated that OMOs would be conducted as and when considered appropriate.

The RBI statement opined that auction will be in four price methods, government security (G-Sec) maturing 2017 with a coupon of 7.49%, G-Sec maturing 2018 with a coupon of 7.83%, G-Sec maturing 2021 with 7.80% and G-Sec 2022 with 8.08%. While there is an overall aggregate ceiling of Rs 12,000 crore for all the securities in the basket put together, there is also no security-wise notified amount.

In the past month, the central bank has also purchased government securities of over Rs 24,311 crore from the money markets in three installments as part of its efforts to infuse liquidity into the system.

The S&P CNX Nifty is currently trading at 4,692.85, lower by 57.65 points or 1.21% after trading as high as 4,756.20 and as low as 4,685.65. There were 8 stocks advancing against 42 declines on the index.

The top gainers on the Nifty were NTPC up 1.43%, Infosys up 1.11%, BHEL up 0.96%, Tata Power up 0.94% and Ambuja Cement up 0.40%.

Jindal Steel down 7.18%, PNB down 4.31%, ICICI Bank down 4.10%, Hindalco down 3.09% and Reliance Infra down 2.94% were the major losers on the index.

Asian markets traded on a negative note; Hang Seng declined 0.59%, Jakarta Composite shed 0.99%, Nikkei 225 slipped 0.20%, Straits Times eased by 0.36%, Seoul Composite dropped by 0.92%, Shanghai Composite dropped 0.66% and Taiwan Weighted dipped by 0.40%.

The European markets were trading in red, France’s CAC 40 declined 0.27%, Germany’s DAX plunged 0.91% and Britain’s FTSE 100 shed 0.31%.