Marketmen expected a breakout on Tuesday since Nifty opened above the crucial level of 5,950 but the bulls could not hold that line and the index ended with a minor gain. If Nifty closes below 5,905, we will witness a decline towards 5,700 again

Unlike the past two trading sessions, on Tuesday the market opened with high optimism on the back of the surprise measures taken by the Reserve Bank of India (RBI) last evening to improve liquidity conditions in the banking system. The benchmarks hit their highest levels since 23 September 2013. But soon the positive move started losing its steam. By the end of the day, the indices gave up most of their intra day gains and hit a low and closed almost near that level.

The Sensex opened at 20,094 and hit a high of 20,150. By the end of the session the index hit a low of 19,937 and closed at 19,984 (up 89 points or 0.44%). The Nifty opened at 5,975 and after hitting a high of 5,982, it moved down to the level of 5,913 and closed almost near it at 5,928 (up 69 points or 0.38%). The National Stock Exchange recorded a volume of 57.73 crore shares.

Among the other indices on the NSE, the top five gainers were Infra (1.80%); Realty (1.23%); FMCG (1.09%); Smallcap (1.03%) and Bank Nifty (0.59%). The top five losers were Media (1.58%); Metal (0.77%); PSU Bank (0.66%); MNC (0.36%) and IT (0.31%).

Of the 50 stocks on the Nifty, 23 ended in the green. The top five gainers were

Bharti Airtel (2.51%); LT (2.21%); I T C (2.09%); Jindal Steel (2.04%) and ICICI Bank (2.00%). While the losers were BPCL (3.23%); Hindalco (2.05%); State Bank of India (2.02%); IDFC (1.93%) and BHEL (1.44%).

While the uptrend is still strong, we suspect that the inability of bulls to follow up on today’s move was significant; it could lead to a decline or more sideways action.

One reason could be worries about a rate hike. Although the market welcomed Monday’s step of liquidity infusion by RBI and the analysts foresee the marginal standing facility rate by a further 0.25%, they also fear a repo rate hike by 0.25% to contain inflation expectations.

US indices closed in the negative on Monday. US President Barack Obama repeated that he won't negotiate with Republicans over the debt limit. “We're not going to negotiate under the threat of economic catastrophe,” Obama said during a visit to the Federal Emergency Management Agency in Washington. Republicans are insisting on changing the 2010 Affordable Care Act, while Obama refuses to engage in discussions about policy conditions tied to opening the government or raising the debt ceiling. Treasury Secretary Jacob J Lew has warned the U.S. may be unable to pay its bills after 17 October.

Except for NZSE 50 (down 0.37%) all the other Asian indices closed in the green. Jakarta Composite, top gainer, up 1.32%.

The HSBC China Services Purchasing Managers' Index fell to 52.4 in September from 52.8 in August, HSBC Holdings PLC said on Tuesday. A reading above 50 in the gauge of nationwide service-sector activity indicates on-month expansion and below that means contraction.

European indices were trading in the red while the US Future were trading in the green.

German exports rose in August amid signs the economic recovery is continuing in the euro area, the country's biggest trading partner. Exports, adjusted for working days and seasonal changes, increased 1% from July, when they decreased a revised 0.8%, the Federal Statistics Office in Wiesbaden said today.

UK factories saw domestic and export demands strengthen in the third quarter and expect to accelerate hiring in the next three months, according to the British Chamber of Commerce (BCC). Measures of manufacturers' export sales and orders rose to the highest since the fourth quarter of 2010, the BCC said in a report published in London today. An index of domestic sales in the quarter increased, while companies' employment expectations advanced to a record.

The Bank of France on Tuesday trimmed its growth forecast for the third quarter of this year after business sentiment indicators remained unchanged in September from August. French gross domestic product will rise 0.1% in the third quarter from the second, the Bank of France said, according to its monthly index of business activity. Last month, the central bank had forecast a 0.2% expansion in GDP.