Nifty may move in the range of 5,390-5480 unless the uptrend resumes

The market settled lower on institutional selling in blue-chips, which resulted in the capital goods, realty and banking sectors ending as the biggest losers today. Today’s closing finally broke the seven-week rally, the first weekly close in the negative since the beginning of 2012.

As we guessed yesterday, today the Nifty slipped below 5,425 and closed a tad above that level. The decline in the past three days may now lead to some buying. But any rally may be met with selling. From here, if the pattern of a lower low and lower high continues, as it did today for the second consecutive day, we may the Nifty finding support at 5,390. At the higher level, index may get resisted in the 5460-5480 area. The National Stock Exchange (NSE) saw a volume of 102.82 crore shares.

Despite positive cues from its global peers the domestic market opened flat for the second day. US stocks closed higher overnight on better-than-expected economic news which also boosted the Asian pack in early trade today. The Nifty opened four points lower at 5,479 and the Sensex was unchanged from its previous close at 18,079.

Initial across-the-board buying saw the indices touching their intraday highs in early trade. At the highs, the Nifty rose to 5,521 and the Sensex climbed to 18,198. However, institutional selling soon led the market into the negative.

News of Citigroup selling its entire stake in mortgage lender HDFC and Etisalat’s exit from the telecom joint venture with DB Realty pulled down individual stocks. Among the sectoral gauges, capital goods, realty and banking suffered the most today.

The losses kept expanding as trade progressed with the market falling to its mid-session low in post-noon trade with the benchmarks dipping below their psychological levels.  At the lows, the Nifty slipped to 5,406 and the Sensex dropped to 17,849.

A minor recovery in the dying minutes enabled the market close off the lows. At the end of trade, the Nifty closed 54 points lower at 5,429 and the Sensex was down 155 points at 17,924. Nifty futures was trading at 40-50 points higher which shows remarkable optimism among the bulls. This alone would be a reason for the market to remain under pressure.

The advance-decline ratio on the NSE was negative at 561:1224.

Among the broader indices, the BSE Mid-cap index fell by 0.64% and the BSE Small-cap index dropped 0.71%.

BSE Metal (up 1.08%); BSE TECk (up 0.56%); BSE IT (up 0.55%); BSE Consumer Durables (up 0.31%) and BSE Fast Moving Consumer Goods (up 0.28%) were the sectoral gainers today. The main losers were BSE Capital Goods (down 2.96%), BSE Realty (down 2.28%); BSE Bankex (down 1.95%); BSE Oil & Gas (down 1.71%) and BSE PSU (down 1.22%).

The top-five Sensex stocks were Sterlite Industries (up 3.83%); Tata Power (up 2.10%); Coal India (up 1.47%); Bharti Airtel (up 0.96%) and Tata Steel (up 0.95%). The main losers were HDFC (down 3.83%); DLF (down 3.44%); Larsen & Toubro (down 3.38%); BHEL (down 2.80%) and State Bank of India (down 2.44%).

Sterlite Ind (up 3.78%); Tata Power (up 2.15%); Coal India (up 1.46%); Power Grid Corporation (up 1.38%) and Jindal Steel (up 1.20%) were the toppers on the Nifty today. The laggards were led by IDFC (down 4.48%); DLF (down 3.66%); Reliance Infrastructure (down 3.63%); HDFC (down 3.62%) and Kotak Mahindra Bank (down 3.30%).

Markets in Asia closed mostly higher, riding on positive economic news. In the US, home sales in January climbed to a nine-month high and weekly jobless claims fell to a four-year low. This apart, the South Korean central bank stated that consumer confidence rose to a three-year high.

The Shanghai Composite gained 1.25%; the Hang Seng added 0.12%; the KLSE Composite rose 0.14%; the Nikkei 225 surged 0.54%; the Straits Times rose 0.33%; the Seoul Composite climbed 0.60% and the Taiwan Weighted settled 0.28% higher. Bucking the trend, the Jakarta Composite tanked 1.62%. At the time of writing, the key European indices were trading with modest gains and US stock futures were in the positive.

Back home, foreign institutional investors were net buyers of shares totalling Rs104.55 crore on Thursday. On the other hand, domestic institutional investors were net sellers of shares amounting Rs640.93 crore.

Pharma major Strides Arcolab today said it has received USFDA approval for its Brazilian plant that produces sterile dry powder anti-biotic injectables. The plant has already been approved by other international regulatory agencies like MHRA and ANVISA and with this approval the company is in a position to commercialise products worldwide in the second half of 2012. Strides closed 0.25% higher at Rs545.15 on the NSE.

Leading steel pipe manufacturer Welspun Corp plans to spend $100 million (Rs500 crore) and add 200 jobs at its 3,50,000-tonne Little Rock production unit in Arkansas state of the US.

Through this expansion, the company will expand its product line of steel pipes to include the production of 6-inch to 20-inch ERW steel pipes, it said. The ERW pipes are largely used by oil and gas companies. The stock tumbled 3.63% to close at Rs141.95 on the NSE.

Panacea Biotec has launched polio vaccine POLPROTEC in Nigeria to help combat the spread of the debilitating disease in the country, one of the last nations still to eradicate the virus. To make the vaccine easily available, Panacea is partnering Emzor Pharma, which has a strong footprint across Nigeria. Panacea settled 3.06% lower at Rs77.50 on the NSE.