Sensex snaps 3-day fall...IT, FMCG shine

After three straight days of losses, the Indian markets bounced back on the back of a strong rally in IT heavyweights like Infosys, TCS, HCL Tech and Wipro. Other frontrunners like Coal India, Hero Motocorp, HDFC Bank, HDFC, ITC and HUL also ended with smart gains.

However, auto majors like Maruti, Tata Motors and M&M were the major laggards. Even banking heavyweights like ICICI Bank, Axis Bank and PNB ended in the red. DLF led the list of losers in the Realty space after it was slapped a hefty fine by the Competition Commission of India.



Finally, the BSE Sensex ended at 16,841 gaining 109 points. It had earlier touched a day's high of 17,000 and a day's low of 16,708. It opened at 16,782. The NSE Nifty closed at 5,056 adding 21 points.

Markets started off with smart gains and the Nifty went on to surge past the 5100 mark in early trades. However, every rally was used to lighten the positions. Sentiment was further dampened after the European markets opened with a negative bias and Asian markets finished mixed.

"Lingering worries over the worsening external environment, particularly in the US and the eurozone continue to haunt global investors. Back home, inflation showed signs of cooling off in July, but a rate hike is still likely on Sept 16.

The fact that CMIE has scaled down the FY12 GDP growth forecast is a cause for concern as well. Monsoon has not been as good as last year. All in all, the markets are facing some headwinds, both locally as well as overseas," says Amar Ambani, Head of Research, IIFL - India Private Clients.

The main Indian equity indices recovered from their intraday lows in the late afternoon trade in what was a highly volatile session. The broader market curtailed losses for the day. But, the market breadth remained negative.

Meanwhile, Coal India surpassed Reliance Industries (RIL) as the top listed company in India in terms of market capitalisation.

Asian markets closed mixed, with indices in Japan in the red while that in Hong Kong and Australia closed higher. The Chinese market finished virtually flat.

Stock indices in the UK, Germany and France fell 1-2% in opening minutes after a summit between German Chancellor Angela Merkel and French President Nicolas Sarkozy failed to calm investors' nerves about the region's fiscal problems. However, the indices did recover from the session lows.

Shares of exchange operators like LSE and Deutsche Boerse tumbled after Merkel and Sarkozy said they will propose a tax on financial transactions.