Daily Market View: Sideways move

The Sensex bounced back from 17,374. But it is too early to say whether the uptrend has resumed

The domestic market, which opened lower, gained momentum as European markets opened on a strong note. The Sensex settled at 17,701; up 167 points (0.9%) and the Nifty shut at 5,312, up 56 points (1%). Trading was range-bound till afternoon. The indices surged in the early afternoon session and closed marginally from the high point of the day.

Asian markets were down for the second day in a row on Wednesday as investors stayed away from risky positions before the quarter-end amid concerns over banks' funding conditions in Europe. Key benchmark indices in Taiwan, South Korea, Japan and Singapore fell by 0.5% to 1.9%. Indonesia's Jakarta Composite rose 0.52%. China's Shanghai Composite was down 1.1% after slumping 4.3% in the previous session, on concerns over the second-half economic slowdown. Hong Kong's Hang Seng was down 0.5%.

US stock markets were down on Tuesday and the S&P 500 was down to its lowest level in eight months as sentiment was subdued on concerns over the global economic scenario. US consumer confidence was down in June after rising for three months, while single-family home prices unexpectedly climbed in April. The Dow was down 268 points (2.6%) to 9,870. The S&P 500 was down 33 points (3.1%) to 1,041.2. The Nasdaq was down 85 points (3.8%) to 2,135.

Back home, the monsoon is running behind schedule in the main sugar- and rice-producing regions, and is not likely to revive in the next few days, the weather office said. The monsoon has covered south India and parts of eastern and central India and has not moved to other areas over the past 11 days as unfavourable weather conditions have inhibited monsoon winds.

Prime minister Manmohan Singh said on Tuesday that capital inflows have not become a problem for the Indian economy as of now and the country does not face a situation that requires imposition of capital controls.

The government may reduce the size of scheduled market borrowings for the second week in a row if tight cash conditions do not ease. The government has reduced the scheduled debt auction for this week to Rs100 billion from Rs130 billion. In the coming week, the government will borrow Rs120 billion. An outflow of $27.9 billion from the banking system on 3G spectrum auction and advance tax payment has caused the cash crunch.

Foreign institutional investors were net sellers in the equities segment, offloading stocks worth Rs261 crore on Tuesday. Domestic institutional investors offloaded stocks worth Rs114 crore.

Karur Vysya Bank (up 0.5%) has decided to fix the base rate at 8.50% p.a. effective from 1st July, while Corporation Bank (up 0.7%) and State Bank of Mysore (up 0.08%) have fixed the rate at 7.75%, and Syndicate Bank (up 0.7%) and Indian Overseas Bank (up 0.2%) have pegged it at 8.25%.

Larsen & Toubro (up 0.6%) has secured a slew of orders aggregating Rs1,015 crore from transmission and distribution projects in the international and domestic markets. The company's metallurgical, material handling and water sector divisions have also bagged orders worth Rs368 crore.

IVRCL Assets & Holdings (down 0.4%) has issued 1,000 Unsecured Redeemable Non-Convertible Debentures of Rs10 lakh each for cash at par aggregating Rs100 crore on a private placement basis. The coupon rate of the NCDs is 10.10% p.a. interest payable on a quarterly basis.

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