Markets succumbed to selling pressure after posting gains yesterday led by losses in banking and mining shares.
The Nifty index opened in the green, at 5,734 tracking firm global cues, but quickly turned negative and edged lower as sentiment turned jittery over proposal of a draft mining bill and touched a low 5,689 level in the late morning session. Also cautiousness prevailed ahead of the cabinet re-shuffle this weekend. The S&P CNX Nifty was trading at 5,694, down 34 points and the benchmark Sensex was trading at 18,976, down 112 points.
Markets have edged up 7% in the past 9 trading sessions on back of Rs 10,088 crore inflows by foreign institutional investors. Analysts said that Indian markets continued to look weak as participation in this rally was very low and the Nifty was unable to cross 5,740-200 Day Moving Average, which is also the long term resistance on a closing basis.
Anil Manghnani, Director from Modern Shares and Brokers Ltd. said, "Markets are still in a bear phase because the short-term 50-Day Moving Average is below the long term 200-Day Moving Average and foreign institutional investors are just churning their portfolio which is moving the market."
HDFC kicked off the results season today. The net profit for the first quarter was reported at Rs 845 crore against Rs 694 crore during the same quarter last year. The Net Interest Income was reported at Rs 1,151 crore. After the result announcement, the stock slipped 1%, at Rs 718.
The metal stocks continued to remain week after the group of ministers headed by Finance Minister Pranab Mukherjee gave a go ahead to the draft bill for the mining sector, which makes it mandatory for coal miners to share 26% of their net profits with project-affected people. The bill also proposed companies mining other resources to pay 100% of the royalty on their production to the original inhabitants of the project site.
Sterlite Industries and Sesa Goa were down 4%, and Coal India declined 7% were the top loser from the metal pack.
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The broader markets are trading on a lacklustre note. The BSE mid-cap index was down 0.2% and small-cap index fell 0.4%.
The overall breadth was negative as 1,205 stocks declined while 1,591 stocks advanced.