Sensex and Nifty may even try to make a recovery

The local market opened weak on mixed cues from its Asian peers, then skidded further early in the day, after which the indices popped in and out of the red in choppy trade. The early decline was led by selling in rate-sensitive sectors like realty, power, auto and capital goods. While the market crawled into the green in mid-morning trade, the volatility put a cap on the gains pushing the gauges lower again.

The indices continued to swing in the post-noon session, weighed by a huge decline of over 3% on the Shanghai Composite, the biggest decline since mid-November, following Friday's 50 basis point increase in the reserve requirement for banks.

The Sensex opened with a gap-up of 23 points at 18,883, but the Nifty made a negative opening, down six points at 5,649. The market remained volatile throughout the day. The Sensex moved in a range of 239 points (107 points up and 132 points down) and ended in the positive (22 points higher) at 18,882. The Nifty ended flat at 5,655. We expect the market volatility to reduce and the indices to trade in a narrow range before the next move.

Foreign institutional investors have been booking profits continuously since 5th January. But the volume of outflow has slowed down. Last week, we expected the market to fall, which it did. The decline will lose momentum as time passes and we may witness a rally soon. It remains to be seen whether the rally is a strong or a weak one.

The market breadth was tilted in favour of the losers. The Sensex had 17 declining stocks and 13 gainers, while the Nifty settled with 30 stocks in the red and 20 in the green. Selling was more rampant in the broader markets as the BSE Mid-cap index declined 1.39% and the BSE Small-cap index fell 1.40%.

The top sectoral gainers were BSE IT index (up 1.73%), BSE TECk (up 1.33%) and BSE Consumer Durables (up 0.25%). The main losers were BSE Realty (down 2.37%), BSE Metal (down 1.32%) and BSE Capital Goods (down 1.17%).

The top performers in the Sensex list were HDFC (up 3.15%), Infosys (up 2.06%), Cipla (up 1.87%), TCS (up 1.74%) and Bajaj Auto (up 1.62%). The laggards included Reliance Infra (down 7.84%), Jaiprakash Associates (down 5.55%), Reliance Communications (down 4.77%), Sterlite Industries (down 3.80%) and DLF (down 3.19%).

The government is likely to take a decision on the $9.6-billion Cairn-Vedanta deal in the next few weeks and the decision would be taken on merits. "There is absolutely no delay on the part of the government regarding the Cairn-Vedanta deal. We will come to a decision on this (deal) in the course of the next few weeks. The decision will be taken on merits," said oil secretary S Sundareshan.

Asian markets closed mostly in the red today, on fears that various nations in the region might tighten policy measures to rein in prices, following the Chinese example. Profit-taking after recent gains was also seen as a reason for today's decline.

The Shanghai Composite plunged 3.02%, the Hang Seng fell 0.52%, the Jakarta Composite slid 0.94%, the Straits Times lost 0.23%, the Seoul Composite was down 0.39% and the Taiwan Weighted declined 0.83%. On the other hand, the KLSE Composite gained 0.29% and the Nikkei 225 added 0.04%.

Back home, cooking oil prices are reported to have surged by up to 62% in last one year, according to Solvent Extractors Association. They expect retail prices of edible oils to remain firm in the wake of high global prices.

Foreign institutional investors were net sellers of stocks worth Rs748 crore on Friday. On the other hand, domestic institutional investors were net buyers of equities worth Rs290.11 crore.

Triveni Engineering & Industries (down 4.71%) has signed a renewal of its license agreement for a term of 12 years with US-based Lufkin Industries Inc, to manufacture high-speed gear and gear boxes. The geographical coverage under the agreement has also been extended to cover major markets in South-East Asia such as Malaysia, Indonesia, Singapore and Thailand.

Steel Strips Wheels (SSWL) (down 0.02%), has bagged a prestigious contract from Peugeot Citroen (PSA) group, one of the major car makers in Europe. The Indian major has been a supplier of its products to the European car major for the past four years. The new business involves supply of nearly 0.6 million wheels in the next five years and foreign exchange earning of almost $9 million.
Sensex and Nifty may even try to make a recovery
IT hardware major HCL Infosystems (up 2.45%) has received a contract from Kerala State Electronics Development Corporation (Keltron) to provide laptops and netbooks to the state government's IT@School project. However, the deal value was not disclosed. The project has been initiated by the Kerala government to foster IT education and facilitate information and communication technologies-enabled education delivery in schools across the state.