Benchmarks negotiate marginal gains; Nifty re-conquers 5,700 mark

After witnessing three days of consecutive gain, stock markets in India showcased consolidation on Monday with both the gauges managing to snap the trade tad above their pre-close level. After hitting the lowest point in the session, the frontline indices showed some signs of recovery in dying moments of trade and closed with a positive bias but did not budge a great deal from previous closing levels. It turned out to be a choppy session of trade as the frontline indices were trading in an extremely tight range. The psychological 18,750 (Sensex) and 5,700 (Nifty) levels proved as strong support levels as the key indices despite repeated attempts refused to go substantially below those levels.

The sentiments got some support with the Prime Minister’s key economic adviser, C Rangarajan’s statement that there is no case for lowering India's credit rating and global agencies need to look at the international scenario before taking any rating action. However, the gains remain capped on report that service sector activity in India, which expanded at the slowest pace in six months in October, too added to the pessimistic environment. According to the seasonally adjusted HSBC Business Activity Index, the service sector activity slowed to 53.5 in October, against September's seven-month high of 55.8. Cues from the money market remained uninspiring for most part of the session as the rupee continued its streak of depreciation. The currency touched a low of 54.56 a dollar in intraday trading after opening at 54.11 a dollar in the morning.

Cues from global markets also remained unsupportive as European counters exhibited a dreary trade in early deals ahead of an expectedly tight US Presidential election race later this week and a Greek vote on structural reforms. Moreover, all the Asian equity indices shut shop in the red as better-than-expected US jobs figures were offset by caution ahead of this week's US election. Chinese market too ended marginally in red despite the report that China’s service industries rebounded from the slowest expansion in at least 19 months, Services PMI rose to 55.5 in October from 53.7 the previous month. The September’s reading was the weakest since a new seasonally adjusted series of the gauge began in March 2011.

On the domestic front, some pressure also came in from IT pack which declined ahead of the US presidential election on November 6, 2012. Metal shares also dropped as commodity prices dropped in New York on November 2, 2012. Some disappointing second quarter result too added pressure to the downside of the markets, the PSU lender Allahabad Bank reported a fall of 52.01% in its net profit at Rs 234.20 crore for the quarter ended September 30, 2012 as compared to Rs 488.02 crore for the same quarter in the previous year, its NPA too increased to 2.95% for the quarter as against 1.77% in the previous quarter. Benchmarks, in the dying hours, managed to eke out some gains supported by defensive FMCG sector, which was able to make some mark with gain of over a percent. Moreover, healthcare supported by some good results and Bankex aided by late hour spurt in PSU banks, were the other gauges that supported the sentiments.

The NSE’s 50-share broadly followed index Nifty rose by only 6 points to end tad above near psychological 5,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex gained about 7 points to finish above the psychological 18,750 mark. However, broader markets underperformed the benchmarks and ended the session in the red with a cut of quarter a percent.

The overall volumes stood at below Rs 1.00 lakh crore, which remained on the lower side as compared to that on Friday. The market breadth remained in favor of declines as there were 1,356 shares on the gaining side against 1,496 shares on the losing side while 132 shares remain unchanged.

Finally, the BSE Sensex gained 7.42 points or 0.04% to settle at 18,762.87, while the S&P CNX Nifty rose by 6.50 points or 0.11% to end at 5,704.20.

The BSE Sensex touched a high and a low of 18,794.63 and 18,683.25, respectively. The BSE Mid-cap index was down by 0.26% and Small-cap index was down by 0.10%.

ITC up 1.64%, Dr Reddys Lab up 1.36%, Maruti Suzuki up 0.89%, Cipla up 0.87% and BHEL up 0.76% were the major gainers on the Sensex. On the flip side, Hindalco down 2.55%, Jindal Steel down 2.04%, Bajaj Auto down 2.02%, Tata Power down 0.94% and Tata Steel down 0.93% were the major losers on the index.

The top gainers on the BSE sectoral space were, FMCG up 1.08%, Health Care (HC) up 0.37%, Consumer Durables (CD) up 0.11% and Bankex up 0.11%, while Power down 0.52%, Metal down 0.48%, Auto down 0.48%, IT down 0.33% and TECk down 0.25% were major losers on the BSE sectoral space.

Meanwhile, amid peaking inflation rate in line with global financial ill health, Finance Minister P Chidambaram has expressed optimism to attain 5.5% to 6.0% financial growth this fiscal, while expecting it to return to 7% growth by 2013 and 8% by 2014-15.

Last month, the International Monetary Fund had scaled down India’s economic growth estimate for 2012-13 to 4.9% from 6.1% previous year. Chidambaram also expressed his concerns over the inflation rate, which had hit a 10-month high of 7.8% in September.

Reserve Bank of India had left interest rates unchanged at 8% last week, without considering government’s pressure to lower rates for the first time since April. While, the central bank had trimmed India’s GDP growth forecast to 5.8% from previous 6.5%. It also scaled up its inflation projection in March to 7.5% from a previous 7%.

However, Chidambaram emphasized that a combination of effective monetary policy, spending cuts, and a tightening of tax collection is necessary to pare the fiscal deficit and to trigger growth. He also denied the chance for India to face a credit rating downgrade, after the rating agency Standard & Poor's recent comments that the nation holds one third chance to be rated to junk over the next two years.

The S&P CNX Nifty touched a high and a low of 5,709.20 and 5,679.50 respectively.

The top gainers on the Nifty were Kotak Bank up 2.08%, ITC up 1.75%, ACC up 1.72%, Asian Paints up 1.63% and Dr Reddy up 1.26%.

The top losers on the index were Hindalco down 2.85%, Bajaj Auto down 2.31%, Jindal Steel down 2.30%, JP Associates down 1.69% and DLF down 1.36%.

European markets were trading in red. France’s CAC 40 down 0.87%, Germany’s DAX down 0.66% and Britain’s FTSE 100 down by 0.63%.

Following Friday's sharp losses on Wall Street, Asian markets went home with red mark on Monday, as investors were not ready to take any strong positions before a series of key events this week, such as US presidential election and China's leadership transition. Hong Kong markets closed lower, tracking two sets of services sector data. While Japan's Nikkei, also ended in negative territory due to profit-taking after last week's healthy gains. Moreover, market players waited for developments surrounding Spain that whether the debt-strapped country will request a bailout from its euro zone partners.