Markets pared gains after opening higher on back of selling pressure in banking and auto shares. The Sensex dropped 38 points, to 20,264 and the Nifty edged lower by 10 points, to 6067.
Fertlizer stocks took a hit as the government differed the decision on freeing up the urea prices. Nagarjuna Fertilizer dipped 3.3%, Chambal Fertlizer lost 3.4%, Deepak Fertilizer was down 2.5% and Tata Chemical edged lower by 1%.
Analysts gave a cautious outlook on the markets as Nifty closed below the 6100 mark yesterday on account of steady selling pressure. Emkay in a research note said,"Nifty broke both 20 and 50 hourly moving averages, which is a worrisome signal. However, unless 5982 is intact, the series of rising lows will remain intact, with short term bullish view also in place." Emkay indicated strong support for Nifty at 6045 on the way down.
US markets ended higher on reports of strong private payrolls data ahead of the labor report which expected this Friday. The rally was buoyed by financial shares. The Dow Jones industrial average gained 0.3%, to 11,723, the Standard & Poor's 500 Index rose 0.5%, to 1,277, and the Nasdaq Composite Index added 0.8%, to 2,702.
In Asia markets were trading weak as Hang Seng shares fluctuated on back of selling pressure in insurer shares. The Hong Kong market was trading flat at 23,798. China's Shanghai Composite dipped 0.2%, to 2,832, and Taiwan Weighted was down 0.1%. On the other hand Singapore's Straits Times rose 0.5% and South Korea's Seoul Composite was trading flat. Japan's Nikkei 225 bucked the trend and climbed 1.2% as investors bought exporter shares after the Dollar advanced to two week high.
Healthcare index was leading the gains, up 0.7%. Glenmark Pharma gained 1.6%, Sun Pharma climbed 1.4% and Apollo Hospital gained 1.3%.
Rate sensitives were leading the losses ahead of the weekly food and fuel inflation data and expectations that Reserve Bank of India may resort to another round of rate hike in January policy to tame Inflation. From the banking space State Bank of India dipped 1.95, followed by ICICI Bank, Yes Bank and Federal bank, down almost 1% each.
From the auto pack, Bajaj Auto dropped over 3%, Hero Honda and Ahsok Leyland were down more than 1% each.
Capital Goods index was one of the prominent sectoral losers, down 0.4%. Thermax lost 1.1%, Gammon India was down 1.9% and BHEL was off 0.6%.
Broader markets were trading flat; the midcap index and smallcap index was flat, at 0.1% and 0.2% each.
On the Sensex, Bajaj Auto was the top loser for the second day, down 2.5%, followed by Sterlite Industries, down 2.3% and ONGC, down 1.3%. Among the gainers, Tata Steel advanced 1%, Hindalco edged higher by 0.8%, and Bharti Airtel dipped 0.7%.
Market breadth was positive, 946 stocks advanced for 700 stocks that declined.