Markets ended in the negative after swinging between gains and losses due to selling in index heavyweights-ITC, Mahindra & Mahindra and Reliance Industries; also concerns over slowing global growth weighed.
The S&P CNX Nifty opened in the green and touched a high of 5,434 in the morning session. The index was choppy for a brief period before giving into selling pressure in the afternoon trades as investors fretted over the impact of slowing growth in the United States and a series of rate hikes by the Reserve Bank of India. The Nifty closed near day's low, at 5,332, down 73 points and the benchmark Sensex ended at 17,693, down 247 points.
Among index heavyweights, RIL, ITC and M&M dragged the Sensex down by 91 points.
Market analysts said that the outlook for Indian equities was uncertain in the near future on worries over health of the global economy and high interest rates locally. A K Prabhakar, Senior Vice President of Equity Research at Anand Rathi said, “The Nifty has support around 5300 levels. If it fails to hold this level for three to four days on a continuous closing basis, then the downtrend will start, whereas on upside Nifty has major resistance around 5740 level.” Markets may continue to remain lacklustre for couple of more quarters. Dilip Bang from Nirmal Bang in their monthly note stated, “Company managements are giving indications of improvements in the earnings only in the second half of FY11-12.”
On the macro front, India's food price index surged 8.04% and the fuel price index climbed to 12.12% percent in the year to July 23, raising expectations that the Reserve Bank of India may not reverse its tightening process very soon.
Across the world markets were trading lower on fears of US economic outlook. In Asia, Japan’s Nikkei Stock Average jumped 1% intraday after the government intervened to curb the rising Yen; however the index was unable to hold on to the gains and ended in the red, down 0.2%. Elsewhere, South Korea's Kospi Composite tumbled 2.3%, Hong Kong's Hang Seng Index dropped 0.5% and China's Shanghai Composite index added 0.2%
Back in India, among individual stocks ITC slipped more than 4% on reports that the government may hike excise duty on tobacco products.
Interest rate sensitives-BSE Auto and Realty shares were leading the losses, down over 2% each
Top losers from the Auto pack were were Mahindra & Mahindra, down almost 4%, Bajaj Auto and Ashok Lelyand lost over 2.5% each.
Prominent losers from the realty sector were Anant Raj Industries, down over 7%, HDIL plunged almost 6% and Parsvanath Developers lost 3%.
In the broader markets, BSE midcap and smallcap indices were down over 0.5% each.
Top losers on the Sensex were ITC, down 3.2%, NTPC slipped 2.5%, Hindalco declined 2.5% and Reliance Industries, down 1.5%. Among the gainers were only two components, Reliance Infrastructure added 1% and Reliance Communication advanced 0.7%.
Market breadth was negative, 1705 stocks declined for 1127 stocks which advanced.
