Sensex prunes gains to settle on a quiet note; Metal, Cap Goods climb about 1%

Friday’s session turned out to be a lackluster one for the Indian stock markets as the optimism that was evident in afternoon trades fizzled out completely by the end leading the benchmark equity indices to a flat closing around the neutral line. The session characterized of choppiness as after Thursday’s close to two percent rally, markets remained cautious and the key indices gyrated in a tight range for most part of the day.

Investors lacked to conviction to open fresh positions amid a lot of uncertainties surrounding the domestic markets. The frontline gauges had drifted around the psychological 16,100 (Sensex) and 4,900 (Nifty) levels in morning trades following the early depreciation in rupee and few reports from influential brokerage houses highlighting that Indian economy may grow at a weaker than expected pace of around 6.3% amid the gloomy global and disappointing domestic setup.

However, the key indices showed a sign of recovery, following the bounce back in rupee against the US dollar after Reserve Bank of India stepped up efforts to curb the beleaguered currency’s declining momentum. But, the key gauges failed to capitalize on the momentum as cautious investors took the opportunity to take profits off the table.

There were signs that the government was preparing to take bolder step of cutting subsidies on other fuels weighing on its budget deficit, but after a day of uproar over petrol price hike, the imminent move looked less likely, thereby keeping marketmen on the sidelines.

Meanwhile, cues from the Asian markets remained mixed however, the benchmark in Indonesia settled with large cuts of over two percent in the session. The European markets too got off to a positive start and supported domestic sentiments.

On the BSE sectoral front, investors were seen piling positions in the Metal counter, which surged around a percent being the top gainer in the space. The Capital Goods pocket too traded with notable gains of around three fourth of a percent, helping the frontline indices pare losses. However, the defensive FMCG counter slipped lower in the session after bellwether ITC dropped over half a percent post announcing quarterly earnings. Corrections in some Oil & Gas majors like RIL and auto heavyweight like Maruti Suzuki capped the upside chances for the markets.

On the global front, sentiments in Asian markets remained cautious since the start of trade. Markets in the region, which had climbed higher in early trades failed to sustain the gains as the concern about Greece's future kept looming large, while there were mixed set of economic reports from US that gave investors little reason to take risk. The informal meeting of European leaders concluded with no concrete steps to fix the continent’s festering financial crisis and remained divided on key issues.

The European market got off to a positive opening, led the benchmark in Germany which climbed about a percent after reports showed overall consumer confidence in Europe’s largest economy remained firm.

The NSE’s 50-share broadly followed index - Nifty shed one point to settle above the psychological 4,900 support level while Bombay Stock Exchange’s Sensitive Index - Sensex lost four points to finish above the crucial 16,200 mark. Moreover, the broader markets performed relatively better than their larger peers as they finished with gains of around half a percent.

The markets consolidated on lower volumes of over Rs 1.65 lakh crore while the turnover for NSE F&O segment remained on the lower side as compared to that on Thursday, at over Rs 1.22 lakh crore. The market breadth remained optimistic as there were 1,478 shares on the gaining side against 1,242 shares on the losing side while 116 shares remained unchanged.

Finally, the BSE Sensex lost 4.48 points or 0.03% to settle at 16,217.82, while the S&P CNX Nifty climbed by 1.00 points or 0.02% to close at 4,920.40.

The BSE Sensex touched a high and a low of 16,273.48 and 16,118.35 respectively. The BSE Mid cap and Small cap indices were up by 0.44% and 0.53% respectively.

The major gainers on the Sensex were Gail India up by 3.37%, Tata Steel up by 2.43%, DLF up by 1.89%, SBI up by 1.74% and L&T up by 1.54%, while Jindal Steel down by 2.59%, Maruti Suzuki down by 2.46%, M&M down by 2.00%, Hindustan Unilever down by 0.88% and HDFC down by 0.86% were the major losers on the index.

The top gainers on the BSE sectoral space were Metal up by 0.92%, Capital Goods (CG) up by 0.89%, Realty up by 0.54%, PSU up by 0.53% and Bankex up by 0.31%, while FMCG down 0.46%, Consumer Durables (CD) down 0.28%, Health Care (HC) down 0.13%, Oil & Gas down 0.07% and IT down 0.05% were top losers on the BSE sectoral space.

Meanwhile, the government should adopt the practice of dual pricing of diesel, says CII. The farm use of the fuel should continue to be subsidized whereas its non-farm use should have a minimum subsidy. Further, the huge subsidy on the price of cooking LPG in the urban areas should be phased out.

The chamber however, is in favour of continuing with kerosene subsidy as it is the poor man’s fuel. CII is also of the opinion that the hike in prices of petrol is steep and is unlikely to resolve the issue of the large subsidy bill. However there is an urgent need to address the issue.

The PHD chamber on the other hand has criticized the hike stating that it is likely to have an inflationary impact on the economy. It has further observed that even though crude oil prices have fallen considerably in the past few weeks, their effect has been nullified with the depreciation in the rupee.

The chamber is also of the opinion that the government should initiate policies that encourage investment and attract foreign capital inflows in the economy. Efforts should also be made to stabilize the falling rupee.

The S&P CNX Nifty touched a high and low 4,935.80 and 4,889.35 respectively.

The top gainers on the Nifty were GAIL up by 3.07%, JP Associates up by 2.94%, Tata Steel up by 2.66%, Cairn up by 2.49% and SBI up by 2.37%.

On the flipside, Jindal Steel down by 2.58%, Maruti Suzuki down by 2.32%, M&M down by 2.10%, Bank of Baroda down by 1.71% and Power Grid down by 1.28% were the top losers on the index.

The European markets were trading mixed, as France's CAC 40 down by 0.46%, Britain’s FTSE 100 down down by 0.04%, while Germany's DAX up by 0.72%.

Sentiments in the Asian region remained bearish and most of the Asian equity indices snapped the day’s trade in negative terrain on last trading day of the week amid fears that Greece may leave the euro zone. The sentiments too got hampered after European leaders failed to find an agreement on how to fix the financial crisis at their recent summit on Thursday. On the regional turf, slowing Chinese economic growth too dampened the regional sentiments. Chinese Shanghai Composite ended lower by 0.74% after the nation’s economic growth dipped about three-year low of 8.1% in the first quarter and factory output in April grew at its slowest pace since the 2008 crisis, increasing the threat of job losses and possible political tensions.

Meanwhile, Taiwan Weighted dropped 0.75% to a nearly five-month closing low on Friday as caution remained over risky assets due the euro-zone’s troubles while, Nikkei 225 edged lower after the country’s consumer prices rose 0.2 percent year on year in April, the third straight month that inflation has moved upward due mainly to higher electricity and petrol prices. However, Kospi edged higher by over half a percent, but gains were capped as investors remained cautious over euro-zone worries.