Nifty headed for the first support of 5,340, subject to a minor rally

The market opened with small gains taking cues from the Asian bourses which were up in morning trade. The Sensex opened 40 points higher at 18,177 and the Nifty added nine points to its previous close to resume trade at 5,448. The indices rose to their intra-day highs in initial trade, with the Sensex at 18,218 and the Nifty at 5,461. The market could not retain the gains and hovered near the neutral line in the absence of any triggers. A bout of selling in frontline stocks around noon pushed the indices lower.

The oil & gas sector was the top loser, following reports of a directive from the oil ministry asking Reliance Industries to drill two wells in the KG-D6 block by next month and another nine by the end of the fiscal, to raise gas output. Higher crude prices also weighed on the sector.

The market touched the day's low in noon trade, with the Sensex losing 116 points to 18,021 and the Nifty dropping 38 points to 5,401. Recovery attempts in the post-noon session were shot down by institutional sellers, which ensured that the indices stayed range-bound in the negative. The market restricted its losses today, but still ended in the red for the third straight day. The Sensex closed 51 points down at 18,086 and the Nifty shed 18 points to settle at 5,421. The advance-decline ratio on the National Stock Exchange was 425:968.

The Nifty fell below its first support of 5,450 today. The fall is acquiring strength now and the next support to watch is 5,340.

The broader markets took a bigger hit today as the BSE Mid-cap index ended 0.61% lower and the BSE Small-cap index declined 0.80%.

The BSE Oil & Gas index (down 1.88%) continued to languish as the top sectoral loser. Other losers were BSE PSU (down 1.77%), BSE Healthcare (down 1.40%), BSE Auto (down 0.98%) and BSE Realty (down 0.92%). The BSE IT (up 0.24%), BSE Fast Moving Consumer Goods (up 0.20%) and BSE TECk (up 0.12%) were gainers.

Among Sensex stocks, HDFC (up 2.34%), Hero Honda (up 1.93%), Maruti Suzuki (up 1.75%), Wipro (up 1.71%) and Tata Power (up 1.50%) were the top performers. Reliance Infrastructure (down 4.11%), Tata Motors (down 3.36%), Reliance Communications (down 3.31%), SBI (down 2.40%) and Jaiprakash Associates (down 2.23%) were the losers on the index.

The government has decided to include natural gas and fertilisers in the list of core sector infrastructure industries, a move that will help capture the performance of the economy in a better manner.

Currently, the government evaluates the performance of six key sectors-crude oil, petroleum refinery, cement, electricity, finished steel and coal-on a monthly basis. The new series, which will have data for eight key sectors, would be released on 10th June.

Markets in Asia closed higher on a weak dollar and strengthening of commodity prices. Japanese stocks advanced on the back of banks and utilities.  Mizuho Financial Group Inc gained 3.2% in Tokyo, on reports that it plans to merge its retail and corporate banks. Cnooc, China's biggest offshore oil producer, gained 2.2% in Hong Kong, while PetroChina Co climbed 1.7% as crude futures rose as much as 1.1% from a three-month low in New York today.

Besides, China's annual housing inflation slowed slightly in April with prices rising 4.3%, a further sign that forceful policy tightening is helping to cool exuberant price rises.

The Shanghai Composite gained 0.70%, the Hang Seng rose 0.48%, the Jakarta Composite surged 1.08%, the KLSE Composite was up 0.33%, the Nikkei 225 advanced 0.99%, the Straits Times added 0.15%, the Seoul Composite jumped 1.59% and the Taiwan Weighted settled 0.68% higher.

Back home, institutional investors were net sellers of equities on Tuesday. Foreign institutional investors offloaded Rs487.20 crore and domestic institutional investors pulled out stocks worth Rs570.29 crore.