Watch out for 5,340 on the Nifty for possible support

A couple of negative corporate news reports pulled down the indices in trade today. The State Bank of India and ONGC emerged as the top losers as the country's biggest lender reported a huge decline in profit and the oil explorer was hurt by buzz that it would have to share more of the subsidy burden to offset the losses incurred by oil majors.

As expected, the market opened sideways, tracking weak cues from bourses across Asia. The Sensex opened 29 points up at 18,374 and the Nifty resumed trade at 5,496, down three points from its previous close. Even though headline inflation for April was lower at 8.66%, investors are worried that the government and the Reserve Bank of India (RBI) will continue to take harsh steps to moderate prices. The market touched the day's high at around 9.45am, with the Sensex at 18,436 and the Nifty touching 5,524.

After staying in the green for almost an hour, the indices lost steam and slipped into negative terrain. The market was range-bound in the absence of any major trigger. Oil & gas was the biggest sectoral loser on reports that the government has increased the contribution of upstream oil companies towards sharing the subsidy burden of fuel marketing firms to 38.5% of the Rs77,922-crore estimate for FY10-11.

The benchmark indices slipped further in afternoon trade, on lacklustre results from the State Bank of India. The news pulled down the banking sector, which ended as the second-biggest sectoral loser. The indices touched the day's low in post-noon trade, as the Sensex fell to 18,085, down 260 points, and the Nifty lost 78 points to 5,421.

The market staged a minor recovery in the last hour, but still closed in the negative for a second day in a row. The Sensex closed 208 points lower at 18,137 and the Nifty ended the session down 60 points at 5,439. The advance-decline ratio on the National Stock Exchange was a negative 438:948.

The market is losing ground and is expected to fall further. The next support for the Nifty lies at 5,340.

Among the broader markets, the BSE Mid-cap index declined 0.66% and the BSE Small-cap index fell by 0.61%.

BSE Oil & Gas (down 3.23%) BSE Bankex and BSE PSU (down 2.24% each), BSE Auto (down 1.02%) and BSE Capital Goods (down 1.02%) were the top sectoral gainers. On the other hand, BSE Consumer Goods (up 0.97%), BSE Fast Moving Consumer Goods (up 0.53%) and BSE IT (up 0.15%) were gainers till worth mentioning.

The top Sensex gainers were Jindal Steel (up 1.97%), Hindustan Unilever (up 1.60%), TCS (up 1.30%), ITC (up 0.83%) and DLF (up 0.64%). SBI (down 7.78%), ONGC (down 6.71%), Hero Honda (down 3.39%), Reliance Industries (down 2.53%) and Reliance Infrastructure (down 2.17%) were the top losers.

The government announced today that the new Index of Industrial Production has been approved by the Committee of Secretaries (CoS). It will come into effect from 10th June and have the base year of 2004-05.

The production trend in a 100 new items, including ice cream, fruit juices and mobile phones will weigh on measuring the pace of industrial production, as per the new index series approved by the government.

Markets in Asia closed mostly in the red, on concerns about a slowdown in economic recovery worldwide. Ric Spooner, Sydney-based analyst, said investors would remain cautious in view of the global developments. Concerns about the debt issues troubling countries in Europe and weak economic data from the US is also weighing on investor sentiments.

Recovering from early losses, the Shanghai Composite gained 0.13% and the Nikkei 225 added 0.09%. On the other hand, the Hang Seng declined 0.26%, the Seoul Composite fell by 0.08% and the Taiwan Weighted was down 0.31%. Stock markets in Singapore, Malaysia, Indonesia and Thailand were closed for holidays.

Back home, institutional participation in the equities segment was meagre on Monday. Foreign institutional investors were net buyers of stocks worth Rs47.07 crore and domestic institutional investors were net purchasers of shares worth Rs3.41 crore.