Market likely to remain volatile again

Equity benchmarks ended flat on Tuesday, as the broadly positive mood in Asian markets encouraged bulls to fight back. However, market watchers said the intra-day recovery had more to do with short-covering rather than genuine buying interest.

The 30-share Sensex slipped to an intra-day low of 15,297.96, but pared much of the losses to close at 15,626.62, down 17.82 points over its previous close. The 50-share Nifty closed at 4739.55, up 5.05 points over the previous close. Robust gains by index heavyweights RIL, ONGC and HUL were neutralised by weakness in other key index constituents like Bhel, L&T, M&M, ICICI, ACC and Infosys.

Most players are expecting a volatile session on Wednesday due to UBS and Deutsche Bank reporting huge write-downs related to the subprime crisis. However, the US markets opened strong with the Dow Jones gaining by up to 300 points in early trade.

Motilal Oswal Securities VP (equity strategy) Manish Sonthalia said the “sentiment was still bad” even as there was some amount of “contrarian buying” on Tuesday. “With the softening of commodity prices, one can expect that money will soon find its way to the equity market,” he said.

In stock-specific action, index heavyweight RIL was in the limelight even as it reported its second gas discovery in deep water exploration block in Krishna Basin after market hours. “While the announcement came after market hours, the effect was clearly visible during the day,” said a dealer with a brokerage. The stock gained 3.56% to close at Rs 2,345.10. HUL, REL, TCS, ONGC were the other prominent gainers in the Sensex pack, each gaining in the range of 2% to 5%.

Elsewhere in Asia, the Hang Seng gained nearly 290 points, even as the Shanghai Composite closed down 144 points. The Nikkei also gained 131 points.

Via ET