After early rally Sensex loses direction; settles near pre-close level

It turned out to be a choppy session of trade for frontline barometer gauges, which witnessed consolidation for second consecutive session settling near their pre-close levels. Stock markets in India, after the gap up opening, held on to the initial momentum for morning trade but lost their direction soon after European market opening. The benchmark equity indices that were trading with over half a percent gain in mid morning trades could negotiate only a flat close in the absence of buying interest ahead of the winter session, which kick starts from November 22, where Mamata Banerjee led Trinamool Congress is likely to bring no confidence motion against the incumbent UPA.

Supportive cues from US markets provided the much needed support to local markets in first half. Investors’ morale got buttressed on the back of reports that US housing data came better-than-expected. Existing-home sales rose 2.1% in October to a seasonally adjusted annual rate of 4.79 million from a downwardly revised rate of 4.69 million in September.

However, disappointing cues from European market took their toll on domestic sentiments in second half and dragged the frontline gauges below the psychological 5,550 (Nifty) and 18,300 (Sensex) levels. Investors mainly resorted to profit booking following the decline in European markets moreover; mixed closing in Asian markets after a firm start too dampened the sentiments.

Back home, markets got some support in the initial trade with the statement of C Rangarajan, chairman of Prime Minister’s Economic Advisory Council that government will strive to rein in the fiscal deficit within the revised target of 5.3% of GDP for 2012. Gains of Auto stocks too cushioned sentiment. Stocks like M&M, Tata Motors and Maruti Suzuki all edged higher on hopes of higher sales this month on account of demand pick up during the festival season. However, sentiment took a hit after shares of gold finance companies, namely, Manappuram Finance and Muthoot Finance dipped on Tuesday after the Reserve Bank of India, in a bid to dissuade people from indulging in speculative activity, banned banks from advancing any loans to its customers for purchasing gold in any form, which includes primary gold, gold bullion, gold jewellery, gold coins, units of gold Exchange Traded Funds (ETF) and units of gold mutual funds.

Even losses of pharmaceuticals stocks, namely Cipla, Ranbaxy Laboratories, added to pessimistic environment. EGoM on the proposed National Pharmaceutical Pricing Policy, headed by Agriculture Minister Sharad Pawar, will meet on Nov 21 to discuss concerns raised by the finance ministry. Additionally, Power stocks, namely, Reliance Infra, NTPC, Torrent Power ran out of fuel even after Power Minister Jyotiraditya Scindia said his immediate priority would be to get coal linkages for the power plants. Moreover, PSU OMCs, BPCL, HPCL, too bore the brunt of profit-booking as crude oil futures traded near the highest price in a month.

The NSE’s 50-share broadly followed index Nifty up by just a point to hold its psychological 5,550 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by about nine points to finish above the crucial 18,300 mark. Moreover, broader markets too butchered during the session and went home with loss of over 3/ 4 percent.

The overall volumes stood above Rs 1.40 lakh crore, which remained on the higher side as compared to that on Monday. The market breadth remained in favor of declines as there were 1,051 shares on the gaining side against 1,802 shares on the losing side while 123 shares remain unchanged.

Finally, the BSE Sensex lost 9.68 points or 0.05% to settle at 18,329.32, while the S&P CNX Nifty rose by 0.15 points to end at 5,571.55.

The BSE Sensex touched a high and a low of 18,467.91 and 18,255.69, respectively. The BSE Mid-cap index was down by 0.76% and Small-cap index was down by 0.88%.

Mahindra & Mahindra up 3.25%, HDFC up 2.02%, Tata Power up 1.81%, Wipro up 1.09% and TCS up by 0.98% were the major gainers on the Sensex. On the flip side, Hindalco down 1.86%, Infosys down 1.46%, SBI down 1.39%, Bajaj Auto down 1.39% and Reliance down by 1.27% were the major losers on the index.

The few gainers on the BSE sectoral space were Auto up 0.64%, Consumer Durables (CD) up 0.11% and Health Care (HC) up 0.09%. While, Realty down 3.02%, Oil & Gas down 0.88%, Metal down 0.73%, Capital Goods (CG) down 0.53% and TECk down 0.44% were major losers on the BSE sectoral space.

Meanwhile, India is all set to conclude the Free Trade Agreement (FTA) in services and investment with Association of South East Asian Nations (ASEAN) by next month, which will send a strong signal of deepening economic engagement and further allow for rapid expansion in trade and investment flows in both directions. Prime Minister Manmohan Singh while addressing India-ASEAN summit, invited investments from the 10-nation ASEAN into India and also highlighted the steps taken by India to improve investment environment.

The FTA in services and investment were delayed due to strong differences between the two sides. However, Singh is optimistic on the conclusion of the agreement on trade in services and investments, together with existing agreement on trade in goods, which will be a launch pad for rapid expansion in economic relations with the ASEAN. By adding further he said, India’s relationship with the ASEAN continues to expand in all magnitude, with commerce and connectivity being crucial areas of this relationship in which good progress has been made.

Further, referring to the India-ASEAN FTA on trade in goods signed in 2009, Singh said that it has served well, with the two-way commerce increasing to nearly $80 billion in the Indian financial year ending March 2012, exceeding the target of $70 billion. However, India would offer its own resources, expertise and experience to support growth and development in ASEAN countries, where such needs exist.

The S&P CNX Nifty touched a high and a low of 5,613.70 and 5,548.35 respectively.

The top gainers on the Nifty were M&M up 3.28%, HDFC up 1.98%, Tata Power up 1.76%, IDFC up 1.65% and ITC up by 1.49%.

The top losers on the index were JP Associates down 3.76%, DLF down 2.44%, PNB down 1.88%, Hindalco down 1.86% and Reliance Infra down by 1.61%.

European markets were trading mixed. France’s CAC 40 down 0.09%, Germany’s DAX up 0.22% and Britain’s FTSE 100 was down by 0.16%.

Asian markets ended mixed on Tuesday amid worries over the US fiscal cliff, which lead to sell off in the markets. Chinese markets went home with red mark, dragging down Hong Kong markets amid weak foreign investment data in China, which fell for a 10th straight month. South Korean market closed marginally higher, as index heavyweight Samsung Electronics was up by 2.4%, which helped the overall market. Japan's Nikkei ended lower taking pause after last three sessions’ gains as the Bank of Japan didn't announce any fresh stimulus at the meeting.