After touching a 33-month high of 20,854.55, markets dipped into the red to touch a low of 20,442.82, down 412 points due to selling pressure in capital goods index. Metal and IT stocks continued to hold marginal gains. The Sensex pared partial gains and ended at 20,477, down 210 points and the Nifty ended down 56 points at 6177.
Markets took a breather after the 485 points rally yesterday after US federal reserve announced the likelyhood of quantitiative easing two in the Novemeber meeting."The markets are not cheap at current levels, but flows are strong and are likely to continue in the run-up to quantitative easing expectations in November," Sandeep Nanda, CIO, Bharti AXA Life Insurance said.
Asian Markets ended in the green, markets in Hong Kong surged on back of rally in chinese local banks and resource stocks, the Hang Seng index ended up 1.6%. Even Shanghai Composite surged 0.6 as policy makers meet this week in beijing to discuss the five year plan and set up a blueprint for improving the economic growth. The Japan's Nikkei average ended up 1.9%. Bank of Korea held the interest rate steady pushing Seoul Composite up 1.6%, Taiwah Weighted also surged 1.3%.
BSE Metal shares joined the wide spread rally in commodities, the index climbed 0.6%. Gold and crude surged on back of weakening green back driving the rally on European bourses as well.
However, analysts expect rise in commodoties not have much impact on India due to rising demand. "The weakness in the dollar due to expectation of quantitative easing is leading to an increase in the dollar denominated prices of commodities; while this could pose a challenge for India's current account given our dependence primarily on oil imports, factors such as no underlying improvement in demand and enough liquidity mitigates this risk," said Nanda.
Among the sectoral indices, IT pared morning gains, up 0.4% ahead of the Infosys results tomorrow.
Capital Goods index has slipped into the negative, down over 1%.
The gainers were Wipro (Rs 492) up 2%, Tata Steel (Rs 650), Infosys (Rs 3185) shedding 1%, Tata Motors (Rs 1182) adding 0.5% and Jindal Steel (Rs 719) up 0.01% round off the gainers list.
Reliance Communications, L&T down 3%, NTPC, Mahindra & Mahindra, Reliance Infrastructure and ONGC shedding nearly 2% were the major losers on the Sensex.
The market breadth was negative. Of the total 3099 stocks traded, 1853 stocks had declined while 1174 had advanced
