P-note hangover continues; technical rebound saves day

Volatility remained the order of the day Friday as traders remained unclear on the after effects of SEBI clamp down participatory notes. Indices, however, managed to come off lows on technical bounce back. Brokers said 'long-only funds' and domestic institutions could have prevented a drastic loss. Capital goods, metals and realty shares were the worst-hit.

"The Nifty has had a bad weekly close. It has formed a 'dark cloud' cover pattern which indicates bearishness. If 5000 on Nifty breaks, then the next support is at 4869," said Manas Jaiswal, senior technical analyst with Emkay Shares & Stock Brokers.

NSE's Nifty ended 126 points lower at 5215.3, recovering from the day's low of 5,102.

The market opened flat with a positive bias, but soon turned weak as selling pressure in the frontline shares intensified.

"There was delivery based selling. People with leveraged positions got badly beaten yesterday and didn't get a chance to exit at higher levels today. So people were exiting at whatever levels they get," said a broker with a local firm.

A fall in inflation numbers around noon did little to lift sentiment. Inflation rate based on wholesale price index for week to Oct 6 fell to 3.07 per cent from 3.26 per cent the previous week. The market estimate was 3.36 per cent.

But a technical bounceback from a crucial support of 17,250 on the Sensex provided some relief. Frontline staged a recovery, but midcaps still remained under pressure.

BSE's Sensex closed 438 points down at 17,559.98, but up from the day's low of 17,226.

The BSE Midcap Index ended 2.53 per cent or 187 points lower at 7,238.58 while CNX Midcap Index closed 3.07 per cent down at 6589.10.

Index pivotals Reliance Communications gained 2.21 per cent, Bajaj Auto advanced 2.07 per cent, Tata Steel rose 1.86 per cent, ONGC added 1.35 per cent and Infosys Technologies gained 1.06 per cent.

In the midcap space, Anant Raj Industries shed 8.91 per cent, Alok Industries slipped 8.24 per cent, Yes Bank fell 8.20 per cent and Mahindra Gesco lost 8 per cent.

Market breadth on BSE showed 2,162 declines and 570 advances, while on NSE, 1,023 shares fell and 161 gained.

Going forward, Manish Sonthalia, vice-president equity strategist at Motilal Oswal remains optimistic.

"It looks like most of the pain is out of the system and the market is offering good opportunities at these levels," he said.