Markets snap nine-day rally amid weak global cues

The markets snapped their nine-day winning streak to end marginally lower on Tuesday, amid weak global cues, as investors booked profits in index heavyweight Reliance Industries after recent gains.
 
The Sensex slipped 46 points to 18,469 and the 50-share Nifty slipped 10 points to close at 5,600 levels.

According to Ranak Merchant, Technical Analyst - Strategies, Sushil Financial Services, "Becnhmark indices tested 52-week highs in yesterday's trade and European markets also witnessed some kind of profit booking, the same was expected in our markets. Some profit booking was on the cards and therefore new positions are not advisable at current levels and a trailing stop loss needs to be in place for all trading positions."

"Broader range for Nifty for October series is expected to be 5450 - 5700," adds Merchant.

Meanwhile, the Asian markets ended on a weak note as markets paused from sharp gains inspired by the Federal Reserve's aggressive stimulus and turned instead to concerns about the growth slowdown in China. The Hang Seng ended weaker by 0.3% or 56 points at 20,601, Shanghai Composite slipped 19 points to 2,059 and the Nikkei closed weaker by 36 points at 9,124.

The European markets were also trading lower as investors turned their attention from central bank stimulus to slowing global growth and uncertainty about Spain's desire for an international aid package.

Investors are worried about Spain's willingness to accept an EU/IMF bailout and this has overshadowed the recent progress policymakers have made in fighting the euro zone debt crisis. CAC40 index was trading weaker by 44 points or 1% at 3,509, DAX shed 82 points or 1.2% at 7,321 and the FTSE slipped 5 points to 5,842 levels.

Back home, soaring vegetable prices pushed up the retail inflation to double digits at 10.03% in August, up from 9.86% in the previous month.

According to the Consumer Price Index (CPI) data released today, the highest rise in prices was for vegetables which recorded, an increase of 20.79% during the month.

Meanwhile, the Indian rupee strengthened against the US dollar as the rupee recovered to 54.05 levels from 54.36 in the opening deals.

Wipro and TCS from the IT space were among the top losers on the Sensex. Both the stocks fell 3.7 and 3% each respectively.
TCS was down on concerns over Jul-Sep earnings.

Index heavyweight Reliance Industries which gained 11% in last four trading sessions witnessed profit taking and slipped 2% to end at Rs 855. Hindalco, Cipla, Tata Steel, Tata Motors, NTPC, Tata Power and Sterlite Industries also closed weaker by 1-3% each. Profit taking was also seen in private banking shares such as ICICI Bank and HDFC Bank.

On the other hand, BHEL was the top gainer among the Sensex stocks. It jumped 5.3% to Rs 225 after the company clarified that the ongoing controversy over coal allocation for power plants would not have any impact on its operations.

SBI, Gail India, Jindal Steel, Infosys, Bharti Airtel, Mahindra & Mahindra, Bajaj Auto, Dr Reddy's Labs and Hero MotoCorp were also among the gainers on the Sensex.

Most of the sectoral indices ended on a flat note. The BSE PSU index was the top gainer with gain of 1.5%. Capital goods, power, bankex, realty and FMCG indices ended flat.

At the same time, oil & gas, IT, healthcare, metal, teck, auto and consumer durables indices ended on a weak note.

Banking shares mainly public sector undertaking (PSUs) banks extend their previous day’s rally and ended higher by up to 6% after the Reserve Bank of India (RBI) reduced the cash reserve ratio (CRR) by 25 basis points to 4.5% on Monday.

Union Bank of India and Oriental Bank of Commerce rallied more than 5% each on the National Stock Exchange. The market price of both these state-owned banks surged almost 15% in past two trading sessions.

Shares of sugar manufacturing companies were in demand with most of the frontline stocks up over 4% on expectation of huge demand ahead of the festive season.

Among the individual stocks Shree Renuka Sugars, Bajaj Hindustan and Dhampur Sugar Mills have rallied 6% each on the Bombay Stock Exchange. Balrampur Chini Mills, Triveni Engineering and Industries and Dharani Sugars and Chemical are up 4-5%.

Shares of power related companies were in limelight on the bourses on reports that the government is likely to clear to restructure the debt of state electricity boards (SEBs) and power distribution companies (discoms) to revive the ailing sector.

Schneider Electric Infrastructure soared 9% to Rs 99 after its promoters made an open offer to acquire additional 26% stake at price of Rs 83.10 per share.

The broader markets outperformed the benchmark indices. The BSE mid-cap index ended higher by 0.8% to close at 6,372 and the small-cap index jumped 0.7% to 6,747.

The overall breadth is positive as 1,606 stocks are advancing while 1,170 are declining.