After early rally Sensex loses direction; settles 0.25% higher

It turned out to be a volatile session of trade for stock markets in India, which registered their second positive close in last three sessions on Thursday. Though, the frontline equity indices’ quarter percent gains appeared marginal when compared to the notable gains amassed by their peers in Asian region, however, it looked prominent in the face of the sharp sell-off seen in European counterparts.

The domestic bourses had capitalized on the initial momentum after the gap up opening but lost their direction in afternoon trades post European market opening. The benchmark equity indices that were trading with over a percent gain in mid morning trades trimmed most of it and touched the lowest levels in the mid noon session.

Supportive cues from Asian markets provided the much needed support to local markets in first half. Investors’ morale got buttressed on the back of reports that the world’s third largest Japanese economy expanded at a faster than expected rate of 1% in the first quarter of 2012. The encouraging Japanese GDP data came after US data showed overnight that industrial production in the world’s largest economy climbed more than forecast in April, indicating that global economic recovery is not as slow as thought earlier.

However, disappointing cues from European market took their toll on domestic sentiments in second half and pummeled the frontline gauges below the important psychological 4,900 (Nifty) and 16,100 (Sensex) levels. Investors resorted to profit booking following the decline in European markets as apart from Greek political instability, fresh concerns over ECB’s denial to provide liquidity to some undercapitalized Greek banks until they sufficiently boost their capital, dissuaded investors from riskier asset classes like equities.

Moreover, concerns from the money market showed little signs of waning as after showing strength earlier in the session, the rupee depreciated to fresh historical low levels. On the BSE sectoral space, buying was witnessed in the defensive - FMCG counter which topped the chart with close to two percent gains followed by the high beta Realty pocket that surged around a percent.

On the flipside, the falls in Capital Goods sector by over two percent and Auto index by about a percent, capped the upside chances for the bourses. Among individual names, big boy Reliance Industries made its presence felt by surging over a percent on reports that the company can fix its KG-D6 gas price at $4.2/mmbtu till 2014.

On the global front, majority of equity markets across the Asian region rebounded with the Japanese benchmark soaring around a percent after data showed that the economy grew at a better than estimated rate of 1.0 percent on quarter in the January-March period, representing a slow recovery boosted by reconstruction from last year’s earthquake tsunami.

Moreover, the European markets too furthered its declining trend after Euro-zone’s financial trouble multiplied as apart from lingering Greek woes, fresh worries from Spain surfaced, stoking fears of contagion from Greece's economic crisis.

The NSE’s 50-share broadly followed index Nifty rose by a quarter percent to settle below the psychological 4,900 support level while Bombay Stock Exchange’s Sensitive Index - Sensex gained forty points to finish below the crucial 16,100 mark. Moreover, the broader markets finished on a flat note, relatively underperforming their larger peers, as they went home with trivial single-digit gains.

The markets rose on weak volumes of over Rs 1.48 lakh crore while the turnover for NSE F&O segment remained on the lower side as compared to that on Wednesday, at over Rs 1.14 lakh crore. The market breadth remained pessimistic as there were 1,340 shares on the gaining side against 1,368 shares on the losing side while 134 shares remained unchanged.

Finally, the BSE Sensex gained 40.39 points or 0.25% to settle at 16,070.48, while the S&P CNX Nifty rose by 11.95 points or 0.25% to close at 4,870.20.

The BSE Sensex touched a high and a low of 16,240.18 and 16,007.92 respectively. The BSE Mid cap and Small cap indices were down by 0.02% and 0.09% respectively.

The only gainers on the Sensex were ITC up by 3.14%, Jindal Steel up by 1.98%, DLF up by 1.68%, HDFC up by 1.59% and SBI up by 1.56% while Mahindra & Mahindra down by 3.57%, L&T down by 3.51%, Cipla down by 2.90%, Bajaj Auto down by 2.69% and BHEL down by 1.51% were the major losers on the index.

The top gainers on the BSE sectoral space were FMCG up by 1.90%, Realty up 0.89%, Oil & Gas up by 0.44%, Metal up by 0.40% and PSU up by 0.18%, while Capital Goods (CG) down by 2.14%, Consumer Durables (CD) down by 1.19%, Auto down by 0.83%, Power down by 0.83% and Health Care (HC) down by 0.34% were top losers on the BSE sectoral space.

Meanwhile, sugar producers will now be allowed to apply for a registration certificate (RC) of up to 25,000 tonnes, as per a notification issued by the Commerce Ministry. Further, the time limit for completing the export order will be 60 days as compared to the earlier 30 days.

On May 14, the Directorate General of Foreign Trade (DGFT) had issued a public notice stating that the issue of RC could be for an amount of up to a maximum quota of 10,000 tonnes only. This was opposed by Pawar and Thomas. Now in reconciliation, the limit has been increased to 25,000 tonnes. The application for the second and subsequent RC can be made after exporting at least 50% of the allotted quantity.

Sugar industry in India was so far completely controlled by the government with the government fixing limits on the amount producers could sell in the domestic as well as the international markets. However keeping in view the increase in demand and the pending arrears that the sugar mills need to pay to the farmers, the government had decided to free its exports.

Sugar production has touched 26 million tonnes in 2011-12 as compared to the annual domestic demand of 21.5-22 million tones. India is the second largest producer and the largest consumer of sugar in the world.

The S&P CNX Nifty touched a high and low of 4,922.25 and 4,850.20 respectively.

The top gainers on the Nifty were Ambuja Cement up by 4.57%, SAIL up by 4.02%, ITC up by 3.56%, JP Associates up by 2.97% and Jindal Steel up by 2.71%.

On the flipside, Reliance Infra down by 3.56%, L&T down by 3.50%, M&M down by 3.34%, Bajaj Auto down by 2.74%, and Cipla down by 2.55% were the top losers on the index.

The European markets were trading in red, as France's CAC 40 down by 0.92%, Britain’s FTSE 100 down 1.12%, while Germany's DAX was down by 0.57%.

After showing ruthless trade in past few sessions, Asian equities got some respite after Japan reported better-than-expected Gross Domestic Product (GDP) numbers, however, Greek crisis continued to weigh down the sentiments. Moreover, the gains remained capped on concern over Europe extended beyond Greece after Spain’s prime minister warned that the nation that it could be locked out of international markets due to problems in the EU, the Spain is trembling under a 24.4% unemployment rate.

Meanwhile, Japanese Nikkei surged over 0.85 percent in the trade after data showed that the economy grew a better-than-estimated 1.0 percent on-quarter in the January-March period, representing a slow recovery boosted by reconstruction from last year’s earthquake tsunami. Moreover, Chinese benchmark Shanghai Composite surged about one and a half percent with country’s consumption-related space broadly stronger in expectation of further policy support after Beijing provided subsidies of $4.2 billion for energy-saving home appliances late on Wednesday.