Market running out of steam

Equity benchmarks extended their gains to the sixth consecutive session on Tuesday, but the rally appeared to be running out of steam. With quarterly corporate earnings broadly falling short of consensus estimates, market watchers expect institutional buying interest to wane, pushing the indices back into a narrow trading range.

The 30-share Sensex closed at 16,783.87, a gain of 44.54 points, or 0.3%, over the previous close. The barometer fell to an intra-day low of 16,597.53, but recovered on the back of a similar trend in key Asian markets. European markets, which opened after the close of trading in India, were firm in early trades.

China, Hong Kong and Singapore closed with small gains, after having started on a sluggish note due to disappointing numbers from Bank of America. With Tuesday’s gains, the Sensex has gained nearly 1,000 points in the last six sessions. But in the absence of any positive trigger, players feel the bulls could be on the back foot in the short term.

The 50-share Nifty rose 12.30 points, or 0.2%, to close at 5,049.30. IT stocks fell out of favour following lacklustre quarterly numbers from TCS announced late evening on Monday. TCS itself bore the brunt, shedding 11% over its previous close, while other stalwarts like Wipro and Infosys too were down 5% each.

Buyers, however, continued to place their faith in infrastructure, cement, banking and real estate shares. Among Sensex stocks, BHEL, Jaiprakash Associates, DLF and HDFC were among the best performers.

The immediate near term trigger for the market is the expiry of the current month derivative contracts. According to Ankur Agarwala of IDBI Capital, the Nifty is expected to see an expiry of above 5,100. “The rally post expiry is expected to continue till 5,280,” he says.

“We could see lot of stock specific action due to various factors in play like inflation, RBI policy, crude oil prices among others. There is bullish trend in stocks like ONGC, SBI, RIL, RPL and NTPC,” he adds.On the downside, he expects 4,880 to be a strong support level for the Nifty.