Markets extended morning losses in the last leg of the trade and declined 1% due to selling pressure in financial 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. The index touched a low 5,651 in the afternoon session as cautiousness prevailed ahead of the cabinet re-shuffle this weekend. The S&P CNX Nifty closed down 68 points, at 5,661 and the benchmark Sensex declined 220 points, at 18,858.
Foreign Institutional Investors pumped in Rs 10,088 crore in the past nine trading session which supported the recent rally. However, technical 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.
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 on technical charts. Also the foreign institutional investors are just churning their portfolio."
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; this was lower than analysts’ expectations. The Net Interest Income was reported at Rs 1,151 crore. After the result announcement, the stock slipped 1.5%, to close at Rs 712.
The earnings trajectory has been at a risk from rising raw material costs and FY12 Earnings Per Share has already seen downgrades of 3-3.5% since January this year. Edelweiss in the monthly note said, “The upgrades to downgrades ratio has also inched down, signifying rising headwinds to earnings momentum.” Analysts expect markets to reverse most of the gains as corporate Inc. reports first quarter results next week. UBS lowered the target on Sensex from 22,500 to 21,000, citing negative earnings momentum.
The metal stocks ended lower 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 royalty on their production to the original inhabitants of the project site.
BSE metal index plummeted 3%. Sterlite Industries and Sesa Goa ended down over 4% each, and Coal India declined 8%, at Rs 362.
BSE Realty index managed to close in the positive, the index was up 2%. DLF was up 1.2%, Hero Honda gained 1% and ONGC advanced 0.4%.
The broader markets ended on a negative note as well. The BSE mid-cap index fell 0.6% and small-cap index declined 0.8%.
Top losers on the Sensex were JP Associates, down 3%, ICICI Bank lost 2.7% and TCS slipped 2.1%. Only eight components on the Sensex ended in the green, DLF advanced 1.2%, Hero Honda was up 1% and ONGC gained 0.4%.
The overall market breadth was negative as 1,757 stocks declined, while 1,127 stocks advanced.
