Markets pared some of their gains and were trading flat, in line with their Asian peers, as investors avoided taking positions ahead of Ben Bernanke’s speech later in the day. The Nifty touched a high of 4,861 and was hovering around 4,850, up 11 points and the Sensex was at 16,188, up 44 points.
Across Asia, markets were trading in a tight range. Japan's Nikkei Stock Average declined 0.1%, South Korea's Kospi Composite lost 0.2%, China’s Shanghai Composite declined 0.8% and Hong Kong’s Hang Seng was off 0.1%. In the United States, the markets slipped 1.5% as investors were concerned that the Federal Reserve may not be left with any rabbits in his hat to bolster the ailing economy.
Back in India, on the technical charts, the Nifty support was at 4,750-4,800 level; if this was breached, the index would see heavy selling, said Ashish Chaturmohta from IIFL Wealth.
On Thursday, the RBI said that India’s growth could slow further because of the global recession and the government may also miss its budget deficit targets. Economists expect the Reserve Bank of India to continue its aggressive monetary policy stance and tighten further in September, despite downside risks to growth.
Analysts expect markets to remain under pressure, going forward. Foreign institutional investors have been net sellers of over $2 billion so far in August as India's political risk has gone up, said Neeraj Dewan, Director from Quantum Securities.
High beta realty and metal stocks were leading the losses. Both the indices were down almost 1% each.
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Top losers on the Sensex were Jindal Steel, down over 3%, followed by JP Associates and Tata Power, down over 1% each. Prominent gainers were Sun Pharma, up 1%, followed by BHEL and HDFC, up 0.8% each.
Top losers from the Realty pack were Prestige Estates and Indiabulls Real Estate, down 3% each, and DB Realty fell 1.4%.
Metals lost sheen for the second consecutive day. Jindal Steel fell 3.6%, JSW Steel declined 2.8% and Sesa Goa was off 2%.
Defensive space Healthcare was leading the gains for the second consecutive day. Prominent gainers were Aurobindo Pharma, up 2.7%, followed by Biocon and Sun Pharma, up over 1% each.
From the broader markets, the midcap and smallcap indices were trading flat.
The market breadth was negative; 714 stocks declined for 586 stocks which advanced.