Sensex sways to the tune of European markets; corners trivial gains

After showcasing a strong performance in the last session, stock markets in India once again slipped in to consolidation mode on Tuesday with the benchmark equity indices cornering trivial gains by the end. 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 Monday’s rally, markets remained cautious and the key indices gyrated in a tight range for most part of the day. Investors lacked conviction to open fresh positions ahead of May series futures and options contract expiry and March quarter GDP data, due later in the week.

The frontline gauges sailed well beyond the psychological 16,500 (Sensex) and 5,000 (Nifty) levels in early afternoon trades but faced stern resistance around those levels. Just when it looked like the domestic markets would snap yet another session with notable gains, volatility crept in and investors started booking profits.

Indian markets literally appeared to be swaying to the tune of European markets in the second half. The firm start for European bourses pulled local markets to the day’s high but the markets there could not hold on to the gains and plunged lower, thereby dragging the domestic benchmarks around the previous closing levels.

Meanwhile, the markets even went onto underperform against the regional peers as most Asian markets settled in the green territory with the bourses in China and South Korea surging over a percent.

The upside for local markets was also capped by the resurfacing concerns from money market where the rupee traded on weak note against the US dollar, snapping three sessions of gains on the back of weakness in euro and dollar demand from oil companies and corporate.

On the BSE sectoral front, investors were seen piling positions in the Information Technology counter which jumped over a percent, being the top gainer in the space. The high beta Realty and PSU pockets too closed with notable gains of around half a percent, helping the frontline indices stay afloat.

The rate sensitive Automobile pocket, which got beaten down in the previous session on reports of government mulling over hiking excise duty on diesel cars, witnessed some short covering. However, the defensive FMCG counter bore the maximum brunt of selling pressure and plunged about a percent, while Consumer Durables and Healthcare sectors too slipped slower by the end.

On the global front, the Asian markets exhibited optimistic trends as investors took to bargain hunting after reports showed world’s second largest Chinese economy continued to employ stimulus measures to boost the nation’s economic activity. The European market opened on a sanguine note but failed to sustain the momentum and pruned most gains as rising Spanish borrowing costs augmented worries about Europe’s debt restructuring challenges.

The NSE’s 50-share broadly followed index - Nifty added single digit gains to settle just below the psychological 5,000 support level while Bombay Stock Exchange’s Sensitive Index - Sensex rose by about twenty two points to finish below the crucial 16,450 mark. Moreover, the broader markets performed largely in tandem with their larger peers and settled on a flat note.

The markets consolidated on good volumes of over Rs 1.94 lakh crore while the turnover for NSE F&O segment remained on the higher side as compared to that on Monday, at over Rs 1.47 lakh crore. The market breadth remained optimistic as there were 1,421 shares on the gaining side against 1,261 shares on the losing side while 128 shares remained unchanged.

Finally, the BSE Sensex gained 21.74 points or 0.13% to settle at 16,438.58, while the S&P CNX Nifty rose by 4.45 points or 0.09% to close at 4,990.10.

The BSE Sensex touched a high and a low of 16,544.38 and 16,410.21 respectively. The BSE Mid cap index was down by 0.17% and Small cap index up by 0.17%.

The major gainers on the Sensex were Wipro up by 2.72%, Coal India up by 2.14%, Maruti Suzuki up by 2.11%, TCS up by 1.39% and ONGC up by 0.98%, while ITC down by 1.55%, Sterlite Industries up by 1.22%, Bharti Airtel down by 0.78%, Cipla down by 0.69% and Sun Pharma down by 0.68% were the major losers on the index.

The top gainers on the BSE sectoral space were IT up by 1.19%, TECk up by 0.74%, Realty up by 0.62%, PSU up by 0.49% and Metal up by 0.35%, while FMCG down by 0.93%, Consumer Durables (CD) down by 0.67%, Health Care (HC) down by 0.30% and Capital Goods (CG) down by 0.15% were top losers on the BSE sectoral space.

Meanwhile, government has cleared 25 foreign direct investment (FDI) proposals worth Rs 2,973.40 crore. These include AIF III of Mauritius and Microqual Techno of Mumbai. The investments have been cleared after they were recommended by the Foreign Investment Promotion Board (FIPB) headed by Economic Affairs Secretary R Gopalan.

AIF III Sub Pvt Ltd proposes to bring in FDI worth Rs 1,000 crore by inducting foreign investment in the units of a Fund constituted as a Trust. Microqual Techno on the other hand,  plans to carry out business of wireless telecommunications. The proposals are worth Rs 1000 crore and Rs 522.90 crore respectively.

Another proposal by Mauritius based Mozart for infusion of foreign investment in an existing company in the pharmaceuticals sector (brownfield investments) has also been approved. The company has proposed to bring in investment worth Rs 300 crore.

Sun Pharma Research Company's proposal to carry out the development of new proprietary drugs through infusion of foreign equity by way of issue of partly paid up shares, too has been cleared.

Other proposals which have been approved includes, Genworth Financial Mortgage Guaranty India worth Rs 124 crore, Plethico Pharmaceuticals, Mumbai  worth Rs 500 crore and Kintetsu World Express (India), Karnataka  worth Rs 267.69 crore. While the proposals which got rejected were, Budenheim India, New Delhi; Hey House Publishers (I) and Growing Opportunity Finance (India), Chennai. The proposals on which decisions were deferred include Fabindia Overseas, Paragon Asset Reconstruction, Tara Aerospace Systems and Netmagic Solutions.

In its last meeting held earlier this month the board had rejected eight proposals and deferred decision on 13 applications. India allows FDI in most of the sectors through automatic route, but approval of FIPB is required in certain sensitive sectors, like defence and telecom.

The S&P CNX Nifty touched a high and low 5,020.15 and 4,982.15 respectively.

The top gainers on the Nifty were HCL Tech up by 2.63%, Cairn up by 2.27%, Wipro up by 2.16%, Coal India up by 1.92% and Ranbaxy up by 1.87%.

On the flipside, ACC down by 2.44%, BPCL down by 2.26%, IDFC down by 1.93%, SAIL down by 1.61% and Grasim down by 1.54% were the top losers on the index.

The European markets were trading in green, as France's CAC 40 up by 0.52%, Britain’s FTSE 100 up by 0.19%, while Germany's DAX up by 0.76%.

Sentiments continued to remain bullish in the Asian region for second straight day and all the Asian equity indices snapped the day’s trade in the positive terrain on Tuesday, as investors taking positions in fundamentally strong stocks after intense selling through May, amid hopes that Greece will avoid exiting the euro-zone. Moreover, hopes that China will implement new stimulus policies to lift domestic demand and fast track some major construction projects too aided the regional sentiments. However, market-men remained cautious by euro-zone woes as attention turned to Spain, where a growing banking and borrowing crisis has raised fears the country could be forced to ask for a bailout.

Meanwhile, Chinese index Shanghai Composite ended up 1.20 percent led by consumer stocks after Chinese Premier Wen Jiabao called for a faster opening of the country’s services sector while, Hong Kong benchmark rose 1.35 percent, lifted by hopes Chinese authorities will announce fresh monetary easing measures. In addition, Japanese Nikkei reversed its early losses to close with a gain of over 0.70 percent after Japan and China said they would allow direct trading in each other's currencies for the first time. However, Nikkei had made a start in red on report that unemployment unexpectedly rose in the country. The unemployment rate increased to 4.6 percent in April from 4.5 percent in March, the first increase in three months.