Markets await Bernanke potion

The stock markets swung both ways on Tuesday, ending flat, the day after falling to their lowest levels in a month.

The benchmark Bombay Stock Exchange (BSE) Sensex was up 29 points to 14,932.77 points (gain of 0.2 per cent). The broad-based S&P CNX Nifty closed at 4356.35 points, up 16.85 points or 0.39 per cent.

Investors were hopeful that the US government would take steps to prevent further damage to giant banks and hedge funds, after US mortgage concerns rocked global markets at the weekend. They also expect the Federal Reserve to leave interest rates unchanged at toight's meeting.

The Sensex opened firm at 15038.03 points, then gained 135 points from the weak close of 14903.03 points on Monday, even though Asian markets showed mixed trends in the morning session.

Several index heavyweights such as RIL, SBI and ONGC opened in the green.

However, the Sensex tripped in the last hour, shedding nearly 200 points from the day's highest level of 15,142.04 points, ending at 14,903.03 points.

Edelweiss Securities said in a note to clients that it expected the Federal Reserve to leave interest rates unchanged. It underlined that the US economy was on a steady growth path, even though housing remained a cause for concern.

"There was some selling at higher levels. Traders don't want to take any positions at this juncture because of overnight risk," said Sumeet Rohra, analyst at Tricolour India Advisory. Major index gainers were Reliance Energy (3.02 per cent to Rs 764.70), NTPC (1.93 per cent) and Bharti Airtel (1.72 per cent).

The BSE Oil and Gas index (7804.55 points) was the best performing index, gaining 85.29 points or 1.10 per cent.

Index losers include ITC (3.02 per cent to Rs 167.15), ICICI Bank (1.9 per cent), Bajaj Auto (1.96 per cent) and Tata Steel (1.3 per cent). Despite bouts of high volatility, analysts say the India story is still intact.

"A corrective phase generally lasts for three weeks. We are only in the second week right now. Indian markets are resilient enough to see a bounce back," Rohra said.

Tata Steel announced the pricing of its foreign currency convertible bonds at the initial conversion price of Rs 876.62 a share.

That's a 35 per cent premium over Monday's closing price of Tata Steel at Rs 649.35.

The BSE FMCG index, which tracks the movement of fast-moving consumer goods scrips, was the worst performer, losing 27.2 points or 1.38 per cent.

Most pharma stocks were in the red, but the BSE Healthcare index was marginally in the green (0.79 per cent).

Novartis India slipped 1.83 per cent to Rs 327.45 a share on the back of reports that the Swiss-based pharma major had lost the Glivec case in the Madras High Court.

Nifty August futures were at a 47 per cent discount to the spot index with investors continuing to build short positions.