Sensex surrenders intraday gains as bleak European cues weigh

Wednesday’s trading session turned out to be absolutely unproductive for stock markets in India as the benchmark equity indices failed to sustain the gains they amassed in the early part of session. The frontline gauges remained range bound for most part of the session but drifted to lower levels in the last leg of trade to settle with trivial gains of two tenth of a percent.

The benchmark gauges got off to a promising start a day after rallying over a percent on the back of RBI’s stunning 50 basis point repo rate cut. The better than expected quarterly earnings announcement from technology major HCL Tech too lifted overall market sentiments and also injected some life in IT and TECk counters, which were on the southward trajectory ever since bellwether Infosys’ weak quarterly result and a gloomy guidance.

However, the psychological 17,500 (Sensex) and 5,350 (Nifty) levels proved as stern resistances as the key indices could not claw beyond those levels, instead drifted lower. The European markets played a spoilsport as they undermined sentiments by opening on a weak note after their biggest gain in more than four months in the previous session.

Back home, market participants grew a bit worried over the quantum of rate cut by RBI fearing that it would reignite inflationary pressure. In addition, a gauge of consumer price inflation indicated that CPI surged to 9.4% in March as compared to 8.33% in February 2012.

However, investors gave a thumbs-up to Automobile sector shares post RBI’s decision to cut key lending rates and the Auto index on BSE surged over one and half a percent amid expectations that the move will boost buyers' sentiments. The defensive Healthcare counters along with heavyweight Oil & Gas pocket too remained among the leading gainers in the BSE sectoral space.

While market participants cashed in on the high beta Realty counter, which plunged about a percent on the back of realty major DLF’s over two percent plunge. The defensive FMCG index too slipped lower after bellwethers ITC plummeted. Besides, the rate sensitive Banking counter too surrendered all its gains by the end of trade to close marginally in red despite the over a percent rally in HDFC Bank after announcing encouraging fourth quarter earnings figures.

On the global front, cues from Asia remained supportive as most markets in the region rallied fervently. The Japanese and Chinese benchmarks went home with hefty gains of about two percent each after healthy US corporate earnings, successful Spanish debt sale and strong German economic sentiment survey bolstered sentiments.

However, the European markets on the other hand, failed to extend last session’s rally as the region’s sovereign debt worries and IMF’s weaker economic outlook for the region weighed on sentiments ahead of a German bond sale that will test demand for ultra-low yielding debt.

Back home, the NSE’s 50-share broadly followed index Nifty, rose by ten points to settle at the psychological 5,300 support level while Bombay Stock Exchange’s Sensitive Index - Sensex amassed thirty four points to finish just below the crucial 17,400 mark. Moreover, the broader markets showed resilience in the session but came off the day’s highs and settled with around half a percent gains outperforming their larger peers.

The markets gained on strong volumes of over Rs 1.43 lakh crore while the turnover for NSE F&O segment remained on the higher side as compared to that on Tuesday at over Rs 1.04 lakh crore. The market breadth remained optimistic as there were 1,625 shares on the gaining side against 1,251 shares on the losing side while 136 shares remained unchanged.

Finally, the BSE Sensex gained 34.45 points or 0.20% to settle at 17,392.39, while the S&P CNX Nifty rose by 10.30 points or 0.19% to close at 5,300.00.

The BSE Sensex touched a high and a low of 17,522.80 and 17,371.93 respectively. The BSE Mid cap and Small cap index were up by 0.46% and 0.50% respectively.

The major gainers on the Sensex were Bajaj Auto up by 2.70%, Tata Motors up by 2.70%, Sun Pharma up by 2.52%, Tata Power up by 2.30%, and Hindalco up by 2.15% while DLF down by 2.05%, ITC down by 1.79%, L&T down by 0.95%, BHEL down by 0.82% and Coal India down by 0.60% were the major losers on the index.

The top gainers on the BSE sectoral space were Auto up by 1.52%, Health Care (HC) up by 1.01%, Oil & Gas up by 0.77%, Metal up by 0.75% and Consumer Durables (CD) up by 0.46%, while Realty down by 0.97%, FMCG down by 0.53%, Capital Goods (CG) down by 0.27% and Bankex down by 0.10% were major losers on the BSE sectoral space.

Meanwhile, the consumer price index (CPI) has surged to 9.4% in March as compared to 8.33% in February 2012, as per data released by the central statistical organization (CSO). The March numbers are provisional whereas the February numbers are final.

The corresponding provisional inflation rates for rural and urban areas for March 2012 are 8.79% and 10.30% respectively. Inflation rates (final) for rural and urban areas for February 2012 are 8.36% and 9.45% respectively.

The CPI numbers which are a recent addition to the government’s data, show the impact of inflation on the final consumer. The WPI (wholesale price index) which is traditionally used by the RBI as an inflation gauge monitors the wholesale prices of the country and so far it was assumed that the consumer inflation would move in the same fashion. However the concept came under criticism as it was felt that these statistics do not correctly bring to light the impact of inflation on the aam aadmi. Hence the government has now started collecting the CPI numbers to get a better account of inflation levels in the economy.

However it will take some time before the series is firmly established and the RBI can start using it as a gauge for inflation. The apex bank has recently cut interest rates by 50 basis points to spur the economy. The cut was based on the WPI index after establishing the fact that inflation has taken a downward trajectory after being stubbornly high for many months.

The S&P CNX Nifty touched a high and low of 5,342.00 and 5,293.45 respectively.

The top gainers on the Nifty were ACC up by 3.45%, Tata Power up by 2.83%, HCL Tech up by 2.79%, Cairn up by 2.78% and Ambuja Cement up by 2.78%.

On the flip side, RCOM down by 2.81%, DLF down by 2.46%, IDFC down by 1.79%, Axis Bank down by 1.75%, and ITC down by 1.54% were the top losers on the index.

The European markets were trading in red, as France's CAC 40 down 1.45%, Britain’s FTSE 100 down 0.36%, while Germany's DAX was down by 0.79%.

After witnessing a deep cut in previous session, sentiments turned bearish in the Asian region on Wednesday and the stock markets rebounded after a slew of solid earnings boosted Wall Street and a successful Spanish bond auction eased worries over Europe’s debt crisis. Moreover, an IMF report forecasting global growth would be stronger than first thought too aided the sentiments. Meanwhile, technology and financial shares were boosted by strong earnings in the United States, while the euro and dollar gained against the yen as traders felt confident to buy riskier assets.

China shares ended with a gain of about 2 percentage point, the biggest one-day percentage rise in more than two months, led by finance and property sectors on expectations the government would ease monetary policy while, Tokyo stocks soared 2.14 percent after surges on overseas markets, driven by easing concerns over Europe's debt crisis and the health of the global economy.