Sensex turns lower again after brief relief

Another attempt by the key Indian stock indices to bounce back into positive terrain came a cropper with the BSE Sensex and the NSE Nifty failing to reverse the day's gains. The Sensex and the Nifty briefly turned positive in the mid afternoon trade but retraced back soon. The recovery could not last long as the European indices gave up some of the early morning's gains.

At 03:03 pm (IST), the BSE Sensex was trading at 16,221, down 139 points or 0.85% over the last close.



The NSE Nifty on the other hand was quoting 4,889, down 33 points or 0.68% after touching a high of 4,930 and a low of 4,829.

Reliance Power, Cipla, HCL Tech, Tata Power, Bharti Airtel, Ambuja Cement, PNB, Reliance Capital, Grasim, NTPC, SBIN, ITC, Reliance Comm, J P Associat and Maruti are among the gainers.

While, Tata Motors, Hindalco, HDFC Bank, Cairn, HDFC, SAIL, Hero Motocorp, L&T, Sesa Goa, Tata Steel, STER, Axis Bank, Reliance and Jindal Steel are among laggards.

FMCG, Power, IT and Pharma indices on the BSE are holding in the positive terrain as investors stick to defensive plays. Metals, Auto and Capital Goods indices on the BSE are down 1% or more. Consumer Durables, Banking, PSU, Oil & Gas and Realty indices are down less than 1%.

European markets slipped after French banking regulator said that 15-20 banks in eurozone need recapitalisation to survive a financial crisis in case of a sovereign default. Banks rose, but resource stocks continued to fall.

The bounce back attempts have been short-lived as traders are not willing to carry any significant open positions over the weekend.

World markets are trying to find some stability in the wake of this week's steep losses.

A statement from G20 nations did help in bringing about some calm into the jittery global markets. But, on the whole there is no material change in the outlook as policymakers have not announced any new measures.

Is this carnage overdone or will there be more pain? The answer is hard to come by at this stage. One must adopt a ‘wait-and-see’ approach. We advise caution if the Nifty stays below 4900.

The good thing for the Indian economy and markets is that commodity prices are softening. If global energy and material prices remain reasonably low we could see inflation coming down, which in turn might prompt the RBI to end its tightening.