While a bounce-back is on the cards, expect a further decline unless Nifty holds above 5,800

Yesterday we had said that the market is now in a downward trend and that immediate support for Nifty was at 5,750 and further down, at 5,700. The market broke its first support in early afternoon and then quickly fell to the second support of 5,700. The low for the day was 5,706. While Nifty bounced back to 5,750 in the late stages, the downward trend looks like a strong one. If the bears are able to maintain the downward trend, we may see the market fall to the level of 5,600. The bulls would regain the initiative only above 5,800. Today's decline meant a fifth negative closing in a row.

The market opened flat as investors remained nervous ahead of the RBI's monetary policy announcement, due on Tuesday. The Sensex opened at 19,293, almost unchanged from its previous close of 19,292 while the Nifty resumed trade two points lower at 5,783. Global as well as Indian analysts opine that the central bank will hike key rates by 25 basis points in a bid to cap rising prices.

The market touched the day's high in initial trade with the Sensex touching 19,357, a gain of 65 points and the Nifty rising 19 points to 5,804 at its intra-day high. Trade was range-bound with small spells of buying, pushing the indices in the green, but profit-taking ensured that they stayed in the negative terrain. A lower opening of the European bourses also added to the indecisiveness in noon trade.

The sell-off increased sharply, pushing the indices further southwards in the post-noon session with the key benchmarks falling to the day's low at around 2.45pm. The US futures trading weak added to the late session woes in the domestic market. At the intra-day low, the Sensex tumbled 277 points at 19,015 and the Nifty retraced 79 points to 5,706. The market bounced back from the lows of the day in the last half an hour, but closed in the negative for the fifth straight day. The Sensex settled at 19,136, down 156 points and the Nifty was 36 points lower at 5,750. The advance-decline ratio on the National Stock Exchange was 378:1015.

The broader indices suffered greater damage than the Sensex today. The BSE Mid-cap index tanked 1.03% and the BSE Small-cap index tumbled 1.57%.

Among the sectoral caps, the BSE Fast Moving Consumer Goods (up 0.88%), BSE Healthcare (up 0.61%) and BSE Oil & Gas (up 0.02%) were the gainers. The losers were led by BSE Capital Goods (down 2.72%), BSE Realty (down 2.66%) and BSE Bankex (down 1.76%).

Hindustan Unilever (up 2.24%), Maruti Suzuki (up 1.27%), Reliance Industries (up 0.83%), Hero Honda (up 0.80%) and Wipro (up 0.79%) were the top gainers on the Sensex. Larsen & Toubro (down 3.87%), Jindal Steel (down 3.57%), ONGC (down 2.79%), Jaiprakash Associates (down 2.57%) and DLF (down 2.37%) were the major losers on the index.

Side-stepping security concerns, India on Thursday finalised most of the terms on which it plans to buy natural gas from Turkmenistan through a pipeline passing through Afghanistan and Pakistan.

Terms of the Gas Sale and Purchase Agreement (GSPA) were finalised at a meeting of the oil ministers of the four to Turkmenistan-Afghanistan-Pakistan-India gas pipeline here yesterday but crucial aspects of price of gas and transit fee were left to be decided by July.

Markets in Asia ended mostly lower on the last trading day of the week on worries of another rate hike by the Chinese central bank and on reports that South Korea's industrial production expanded at a slower pace in March. South Korea's factory output climbed 8.7% in March from a year earlier after gaining a revised 9.2% in February.

Besides, the HSBC's China Purchasing Managers' Index (PMI) stood at 51.8 in April, unchanged from March even as the government hiked interest rates, pointing to a steady growth in the country's manufacturing sector.

The Hang Seng was down 0.36%, the KLSE Composite shed 0.02%, the Straits Times fell 0.16%, the Seoul Composite declined 0.72% and the Taiwan Weighted was down by 0.36%. On the other hand, the Shanghai Composite gained 0.87% and the Jakarta Composite advanced 0.28%. The Japanese market was closed for a local holiday.

Back home, foreign institutional investors were net sellers of equities worth Rs832.59 crore on Thursday. On the other side, domestic institutional investors were net buyers of shares worth Rs532.60 crore.