Markets erase gains as metal, realty weigh

Markets erased morning gains after selling pressure emerged in metal and realty shares. The Sensex, after opening firm on global cues, slipped to a low of 17,094. The index finally ended with a loss of 74 points at 17,119. Nifty ended down 21 points at 5,148.

Asian stocks rose on expectations that a new government in Italy would be able to bring in much-needed reforms and prevent the debt problem from spreading. The Nikkei jumped 1% to 8,603 while Hang Seng and Shanghai Composite surged 2% each.

Headline inflation hovered stubbornly near the double-digit mark in October, rising marginally to 9.73% as prices of food products, fuel and manufactured goods put more pressure on the common man's pocket and major sectors of the economy.

Moreover, Finance Minister Pranab Mukherjee said that the euro zone crisis is impacting the country's growth and will hurt exports in coming months.

BSE realty index shed 2.5%, followed by metal and auto shares. Bankex, however, was flat - at 10,651. Global rating agency Standard & Poor's had upgraded the Indian banking sector last week, saying its domestic regulations are in line with international standards. BSE IT index was up 0.6% at 5,783.

"Technology stocks have been showing some strength recently, mainly due to the depreciation of the rupee but most of them have not yet managed to cross above their 200 day moving averages. Therefore it is possible that this level could act as a significant resistance to these stocks, particularly if the broad market remains lacklustre", said Hormuz Maloo, Technical Analyst, Geojit BNP Paribas Securities.

Bharti Airtel jumped 2.5% to Rs 405. Hero MotoCorp and HDFC Bank were up 1.5% each. Sun Pharma added 1.3% at Rs 510 after reporting 19% year-on-year (y-o-y) growth in net profit at Rs 598 crore for the second quarter ended September 2011 on the back of higher sales and forex gain. Net sales grew 42% to Rs 1,895 crore on y-o-y basis.

The net profit of Mahindra and Mahindra (M&M) decreased marginally by 2.7% during the quarter ended September 2011. Its net profit dipped to Rs 737 crore from Rs 758 crore during the corresponding quarter a year ago. The stock was down 6% at Rs 790.

Other losers included Tata Steel and Sterlite from the metal space and Maruti Suzuki in the auto pack.

Sugar manufacturing companies such as Shree Renuka Sugars, Bajaj Hindustan, Balrampur Chini, Sakthi Sugars, Simbhaoli Sugars and Upper Ganges Sugar are under pressure on the bourses on reporting disappointing financial results for the quarter ended September 2011, due to volatile global market developments. The stocks slipped 1-25% each in trades today. Thirty two sugar companies have declared their quarter results, posting an aggregate net loss of Rs 727 crore for the quarter ended September 2011 compared to Rs 70 crore in the corresponding quarter of the previous year.

Aviation stocks were in the red. Jet Airways slipped as the company slipped back to net loss, compared with a profit a year ago. SpiceJet also reported a loss higher than the Street expectation. However any move by the Government to allow foreign direct investments in aviation could trigger some buying activity. Meanwhile, creditors to Kingfisher Airlines have asked it to raise Rs 800 crore ($160 million) equity and would not consider debt restructuring unless the troubled airline has a credible plan in place, managing director of State Bank of India said on today. Shares of Spice Jet and Jet Airways tumbled 2-5% each. However, Kingfisher added 8% to Rs 21.35.

BSE market breadth was fairly negative. Out of 2,944 shares traded, 1,983 declined while 864 advanced in trades.