The markets staged a strong rebound towards the later half of the day to register a respectable closing in a volatile session of trade. The Sensex retraced around 300 points from the day's low to end at 18327, lower by 68 points and the Nifty ended flat at 5505, down six points. The midcap index ended at 6868, lower by 30 points and the smallcap index ended at 8477, down 68 points. Return of stability on the European front seem to have aided the recovery.
The day began on a gloomy note as the political unrest in Egypt had already spooked the markets worldwide and threatened to engulf other areas of the Middle East. The Dow has slid by almost 200 points and S&P 500 had recorded its worst one-day fall in six months on Friday and the Asian markets were staring down the barrel in early trades. Moroever, the Indian markets have been in an downtrend after breaking 200 DMA midway through the day, culminating in a fall of 281 points and an identical 288 points (Sensex) on two successive days to end the past week with losses in excess of 3%. As one would have expected, the benchmark indices had a gap-down opening and touched 5 mth-lows of 18,038 in early trades.
More than 100 people have been killed in six days of unprecedented protests in Egypt, aimed at seeking employment opportunities and putting an end to the pro-American President Hosni Mubarak's 30-year, authoritarian rule. The upheaval has been inspired by the succesful overthrow of the corrupt regime in neighbouring Tunisia last month. It is indeed a catch-22 situation. If President Hosni Mubarak clings to power, investors could reprice the Egyptian markets, on the downside, fearing heightened political risks. On the other hand, the exit of Mubarak could lead to similar unrest across the region, threatening energy supplies and a global economic recovery.
The Asian markets finally ended lower by about a percent each; Hang Seng finished down 0.72% and Nikkei fell 1.2% to a one-month closing low as investors shunned riskier assets in face of the looming clouds across the Mid-eastern horizon. Straits Times dropped 1.5% and Seoul Composite slipped 1.8%. But a partial recovery in the European markets, which had slid by more than a percent each at one point, coupled with buying interest at lower levels, seems to have facilitated the rebound back home. The FTSE, CAC and DAX were trading lower by about half a percent in mid-day trades.
The BSE realty index was the largest loser among the sectoral indices for the second day running, shedding another 2.2% at 2186. However, a recovery in the hitherto battered oiland auto stocks helped the indices helped the indices to get back on their feet. Jaiprakash Associates shed 4.9% at Rs 83 to emerge as the top loser on the BSE. ITC lost 3.1% at Rs 162 and HDFC shed 2.7% at Rs 629. Bharti Airtel, Reliance Infra and TCS were the other significant losers. And in the realty space, HDIL plunged by 5.9% at Rs 131, Unitech weakened by 5.6% at Rs 48. However, after losing more than 10% in the previous two sessions, DLF stabilised to end with marginal gains of 0.3% at Rs 223.
On the other hand, Oil and Natural Gas Corporation (ONGC) flared up by 3.6% at Rs 1,177 after reporting better-than-expected net profit for the third quarter ended December 2010. The net profit of the energy giant more than doubled to Rs 7,080 crore in Q3FY11 from Rs 3,050 crore in the corresponding quarter of the previous year due to the higher crude oil prices and an increase in natural gas prices by the government. RIL, which has seen an almost verticla fall from the Rs 1030 levels, saw buying interest to add 0.5% at Rs 919 and Maruti Suzuki India, which had slumped 5% in early trades after net profit declined 17.79% to Rs 565.17 crore, rebounded smartly to end higher by 1.5% at Rs 1252. BHEL and Hindalco were the other significant index gainers. And Siemens soared by 17.32% at Rs 853 to top the Group A charts on the BSE after receiving an open offer from parent company, Siemens AG, to buy a stake of 19.8% from the company. In fact, the strength on the ONGC and Siemens counters was singularly responsible for the rare outperformance of the Nifty over the Sensex.
The market breadth was weak. Out of 3006 stocks traded on the BSE, there were 1180 advancing stocks as against 1660 declines.
