The markets broke a two-day losing streak to end on a confident note due to the return of stability on the global front and short-covering in the derivatives segment. Leaving behind the disappointing triple digit losses of the past two trading sessions, the Sensex ended at 18226, higher by 46 points and the Nifty ended at 5477, up 15 points. The midcap and smallcap indices ended virtually unchanged at 77087 and 9767 respectively.
The global markets had an assured look about them. US stocks staged a comeback overnight on bargain hunting after touching six-week lows; Dow ended up 19 points at 10,060 and Nasdaq rose 17 points at 2,141. And European markets, including the FTSE, CAC and DAX, rose upto a percent each in mid-day trades. While the Asian markets had a mixed session, it was a marked improvent over the nervousness that loomed over the previous day's session. The key benchmark indices in China, Singapore and Japan were up between 0.03% and 0.69%, while South Korea, Indonesia, Hong Kong and Taiwan saw a fall between 0.11% and 0.61% each.
The Sensex's losses over the past two trading sessions also come to the rescue in a paradoxical way. The market participants were forced to cover their short positions as this was the last day of the current derivatives series. It is pertinent to note that the derivatives expiry days over the past six months have been marked by a conspicious lack of volatility and this time was no different. The Sensex traded in a narrow range of about 100 points throughout the day, with the late-noon session accounting for most of the index movements.
The good news on the food inflation was also something to cheer about. The annual food inflation fell for the second straight week, declining to 10.05% for the week ended August 14, as prices of vegetables such as potato and onion declined. Food inflation had softened to 10.35% for the week ended August 7 against 11.40% in the earlier week. On an yearly basis, potato became cheaper by over 50%, while vegetables saw a decline of 14.23%.
NTPC was the leading gainer on the BSE, strengthening by 2.2% at Rs 197. DLF gained 2.1% at Rs 318 and ITC added 1.6% at Rs 163. SBI, HDFC and Bharti Airtel were the other significant gainers.
On the losers side, RCom continued its weak run to shed another 2.3% at Rs 159, Sterlite ended at Rs 152, lower by 1.2%, and RIL lost further ground to end at Rs 956, down 1.1%, on the BSE.
The market breadth turned mildly negative at close. Out of 3034 stocks traded on the BSE, there were 1328 advancing stocks as against 1588 declines.