Markets ended the lacklustre session on a soft note on account Eid holiday and investors turning to sidelines after three consecutive days of gains which pushed the market up 4.6%.
Markets opened flat at 5468 on back of weak cues from Asia and United States. The Nifty traded in a narrow 38 points range, touching an high of 5498 and a low of 5460. T he 50-stock S&P CNX Nifty ended at 5482, up 1 point and the Sensex closed at 18,306, up 32 points.
Other markets in Asia ended on a mixed note, exporter shares gained in Japan on weakening Yen and markets in China surged marginally after latest inflation eased concerns of further tightening in Beijing. Japan's Nikkei Stock Average ended up 0.6%, China's Shanghai Composite Index gained 0.9% and Hong Kong's Hang Seng Index was up 1.1%.
Earlier in the day, Prime Minister Manmohan Singh defended himself in an interview with TV Editors that the government was trying to bring justice in India's largest corruption scandal. However markets were unmoved by PM's rare roundtable interview with TV editors.
This year market men do not expect a major pre-budget rally and forsee a populist budget. Vivek Mahajan, Head Research, Aditya Birla Money said, "the relevance of budget is reducing by the year. However, with nearly five states going to the polls post the Budget, we may expect a populist budget." Mahajan expects subsidies to remain high and also expects a possibility of rollback of the economic stimulus package. "The impact of the budget is likely to be neutral to marginally negative," Mahajan added.
Given the current market conditions, Mahajan recommends investors to accumulate stocks with a long-term perspective and restructure the portfolio. "Use volatility to accumulate fundamentally sound stories with good corporate governance," said Mahajan.
From Individual stocks, Tata Steel was the top gainer on Nifty, up 3% after net profit doubled on back of robust demand and pricing power. However surge in raw material costs weighed on the margins.
Cement stocks also ended higher, JP Associates surged 3%, Ambuja Cements zoomed 2.1%.
On the other hand, auto shares were among the top losers, Mahindra and Mahindra fell 2.8%, Tata Motors and Maruti were off over 1% each. Financials also ended in the red, IDFC dipped 4.3% after clocking three days of gains, HDFC declined 3.2% and Kotak Bank was down 2%.
Technology shares were also weak, TCS, Wipro and HCL Technologies were down 0.8%-0.9%.
Hindalco, down 1.7%, Reliance Communication, down 1.6% and DLF, down 1.2% were the top losers on Nifty. Jindal Steel, up 2%, Sun Pharma, up 1.5%, Ranbaxy, up 1.1% and Larsen and Tourbo, up 1.2% were the prominent gainers.
Broader markets outperformed the benchmark, the midcap and smallcap index were up 0.5% and 1% each.
Market breadth was positive, 1683 stocks advanced for 1098 stocks that declined.