Next support is at 18,500 on the Sensex and 5,550 on the Nifty
The market opened higher on better-than-expected quarterly data announced by some corporates and optimism from the Asian markets. The banking sector, which was the top loser on Tuesday, witnessed some buying in early trade. However, selling pressure soon led the key indices into negative territory. A marginal rise in the weekly food inflation figures also added to the woes. Volatility was associated with the expiry of the January futures and options (F&O) contract.
The selling became intense in post-noon trade, dragging all the sectoral gauges into the red and closing lower for the second day in a row.
As we expected, the market fell today. The Sensex opened 117 points up at 19,087, gaining the maximum in opening trade over the past 10 days from 13 January 2011. The Nifty opened 38 points up at 5,725. But that was the high point of the day. Bears took over immediately. The market declined below Tuesday's low within an hour, setting the stage for a further fall. The Sensex finally ended 285 points down to close at 18,684 and the Nifty fell 83 points to close at 5,604. Today's fall has broken the past week's low, hitting a new four-month low. Today's decline takes the market in the bear market territory. The next supports are at 5,550 on the Nifty and 18,500 on the Sensex, after which we may witness a pre-budget rally. The advance decline on the NSE was 476:1,232.
The market breadth was tilted in favour of the losers today. The Sensex closed with 28 stocks in the declining list and two stocks in the advancing list while the Nifty had 42 losers and eight gainers. Among the broader markets, the BSE Mid-cap index tumbled 1.88% while the BSE Small-cap index declined 1.35%.
All sectoral gauges closed in the red today. BSE Realty (down 3.57%), BSE Healthcare (down 2.61%), BSE Metal (down 1.98%), BSE Bankex (down 1.85%) and BSE Consumer Durables (down 1.81%) were the top gainers.
Tata Motors (up 2.48%) and TCS (up 0.62%) were the only two gainers in the Sensex list. The top losers were DLF (down 5.42%), Sterlite Industries (down 5.28%), Mahindra & Mahindra (down 4.87%), Reliance Communications (down 3.88%) and Hindustan Unilever (down 3.78%).
Dearer vegetables pushed food inflation marginally up to 15.57% for the week ended 15th January from 15.52% in the previous week, prompting experts to say that the Reserve Bank of India (RBI) may go for yet another round of rate hikes in its mid-quarterly policy review in March. Food inflation was 20.07% a year ago.
Based on price movement in the wholesale market, food inflation rose by 0.05 percentage points for the week ended 15th January, after declining for two consecutive weeks.
Markets in Asia closed mostly higher on signs of economic recovery in some countries in the region. The South Korean market gained on better-than-expected economic growth while the Chinese market was supported by commodity-related stocks.
The Shanghai Composite surged 1.47%, the Jakarta Composite rose 0.37%, the KLSE Composite gained 0.46%, the Nikkei 225 advanced 0.74%, the Seoul Composite rose 0.22% and the Taiwan Weighted ended 0.52% higher in trade. On the other hand, the Hang Seng fell 0.27% and the Straits Times shed 0.03%.
Back home, oil minister S Jaipal Reddy today ruled out deregulation of diesel prices, saying it is not "politically and practically" feasible.
"Let me make it clear, I agree in theory that diesel prices should be deregulated, but whether it is practically and politically feasible is totally different," he added.
Foreign institutional investors were net buyers of stocks worth Rs272.99 crore on Tuesday while domestic institutional investors were net sellers of equities worth Rs169.68 crore.
IT major HCL Technologies (down 0.71%) has entered into a partnership with the PT Multipolar Technology, a subsidiary of Indonesia-based Lippo Group, to offer IT outsourcing in that country. The deal involves IT outsourcing projects in banking, telecom and other sectors this year.
Utility vehicle maker Mahindra & Mahindra fell 4.87% amid reports that Goldman Sachs downgraded the stock to 'sell' from 'buy'. According to media reports, Mahindra & Mahindra sank after its rating was lowered by the Goldman Sachs Group Inc, which cited increased 'cyclical risks' to demand growth.
Steel Authority of India (SAIL) (down 1.59%) is considering setting up a 3 million tonne (MT) steel plant at an investment of Rs15,000 crore at Central Kalimantan province of Indonesia, apart from setting up a mineral processing facility.
The steel major has already signed a memorandum of understanding (MoU) with the Indonesian government for setting up a steel plant and a mineral processing unit besides development of mineral deposits at Central Kalimantan province of the South-east Asian country.
Davos: Undeterred by the murmur over governance deficit impacting growth in India, ICICI Bank CEO and managing director Chanda Kochhar today exuded confidence that the leadership will manage these issues as the nation moves ahead on the high growth path, reports PTI.
"I have confidence that we will be able to manage these issues and not allow them to dampen growth", she told PTI in an interview when asked whether governance deficit could hurt growth prospects.
Pointing out that these issues arise with opportunities, Ms Kochhar, said, "We have to handle these issues and not ignore them...Will these issue become big for diaspora? I think not."
Ms Kochhar is here as one of the six co-chairs of the annual meeting of the World Economic Forum being attended by the world's top CEOs, heads of states, academicians and even faith leaders.
"It is possible for us to handle it (issues of corruption). We will have to say that we will handle it. I am very optimistic that we have the capability to handle it," said Ms Kochhar.
Expressing disappointment at the performance of the Indian government, noted industrialist and Wipro chairman Azim Premji yesterday told a television channel, "I think it is a national calamity and is personally very devastating because one had so much confidence when they (UPA-II) came in.
"One has reached a point in public governance where one has to take stock... Enough is enough, we have to reform ourselves. If we don't do that, we are not going to leave children behind us proud of the country, despite 8%-9% (economic) growth," Mr Premji had said.
Mr Premji, along with other prominent personalities, including Mahindra & Mahindra chairman Keshub Mahindra, HDFC chairman Deepak Parekh, former RBI governors M Narasimham and Bimal Jalan, in an open letter to the Indian government had expressed concern over a series of scams that pointed toward a "governance deficit".
In the letter, they had asked the government to deal with burning issues like corruption urgently.
India has recorded a growth rate of 8.9% during the first half 2010-11 and hopes to end the fiscal with a growth rate of around 9%, up from 7.4% in the previous fiscal.
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