Watch for Nifty to close above 5,450 for a possible short rally

The market opened positive, tracking gains across Asia. The Sensex started at 18,167, while the Nifty opened at 5,448, the identical opening level yesterday. A rise in commodity prices in the international market supported gains in metals and oil & gas stocks in early trade. Banking stocks were also in demand, after being down for two days following the dismal numbers by the State Bank of India. Market performance was range-bound and the indices stayed within Wednesday's high and low. The Sensex closed 55 points up at 18,141 and the Nifty closed eight points up at 5,428.

The market remained range-bound, even as weekly food inflation numbers for early May came in lower at 7.47%. Turnkey engineering major Larsen & Toubro's (L&T) better-than-expected numbers helped the company's stock take the top gainer's position on the Sensex, though the market seemed to overlook the development.

The intra-day movement on the Sensex was between 18,058 and 18,198 while the Nifty traded between 5,411 and 5,453. The Nifty will be strengthen for a few days only above 5,450.

The advance-decline ratio on the National Stock Exchange was 548:1142.

The broader markets underperformed the Sensex today, as the BSE Mid-cap index declined 0.70% and the BSE Small-cap index was down 0.54%.

In the sectoral space, BSE Capital Goods (up 2.82%), BSE Oil & Gas (up 1.16%) and BSE IT (up 0.34%) were the top gainers. BSE Realty (down 2.87%), BSE Metal (down 0.98%) and BSE Power (down 0.85%) were the main losers.

L&T (up 5.92%), Reliance Industries (up 1.45%), ONGC (up 1.20%), TCS (up 1.14%) and Mahindra & Mahindra (up 1.11%) were the top performers on the Sensex. The laggards were led by Reliance Communications (down 3.43%), DLF (down 3.35%), Hindalco Industries (down 3.14%), Tata Power (down 2.60%) and Hero Honda (down 2.31%).

Continuing on its downward trend, the country's food inflation slipped further to 7.47% for the week ended 7th May, from 7.70% in the previous week. This is the lowest rate of price rise in food items in the last 18 months, since separate data for food inflation started coming in. It is also the third consecutive week that food inflation has been lower.

Commenting on the decline, finance minister Pranab Mukherjee said, "Both in food inflation and overall Whole Price Index (WPI) inflation there is a declining trend."

Markets in Asia, which opened strong this morning, settled mixed on the decline in Japanese gross domestic product (GDP) in the March quarter. GDP fell to an annualised 3.7% in the three-month period, exceeding analysts' estimates, pushing the country into its third recession. South Korean electronics major Samsung Electronics declined 1.5% after Gartner reported the company's share of the mobile handset market slipped to 16.1% from 18% earlier.

Singapore's benchmark Straits Times closed up 1% on news that its economy grew 22.5% in the first quarter of 2011 on an annualized, seasonally adjusted quarter-on-quarter basis.

The Hang Seng gained 0.66%, the Jakarta Composite rose 0.51%, the KLSE Composite added 0.18% and the Straits Times surged 1%. On the other hand, the Shanghai Composite fell by 0.45%, the Nikkei 225 declined 0.43%, the Seoul Composite tumbled 1.89% and the Taiwan Weighted lost 0.58%.

Back home, foreign institutional investors were net sellers of equities on Wednesday, offloading stocks worth Rs379.44 crore. On the other hand, domestic institutional investors were net buyers of shares worth Rs27.46 crore.