Sensex falls on global jitters...IT shares recover

Sensex ended at 16,936, down 148 points. Nifty closed at 5,092, down 47 points.

After witnessing a strong rally in the previous session, the benchmark Indian indices ended in the negative terrain on Thursday, tracking weak cues from the international equity markets. The US markets ended with losses after a weak assessment of the US economy by the Federal Reserve in it's Beige Book survey.


The European markets also were trading in the red amid reports that European leaders are still divided on the issue of expanding the eurozone rescue fund ahead of this weekend's important summit in Brussels. It may be recalled that contradicting reports had emerged on Wednesday about a reported agreement between Germany and France over the expansion of the EFSF.




As far as domestic cues are concerned, the Finance Minister's admission that key economic targets for FY12 will be difficult to meet has also dampened the sentiment before the RBI's policy meet on Oct. 25. Today, Dr. Rangarajan, the Chairman of the PM's Economic Advisory Council also endorsed the Finance Minister's view on the economy.


Finally, the BSE Sensex ended at 16,936, down 148 points. It had earlier touched a day's high of 16,962 and a day's low of 16,745. It opened at 16,912. The NSE Nifty closed at 5,092, down 47 points.


In the second half, the markets recovered to end near day's high on the back of strong rollover in the banking stocks. Among the other major gainers were select Telecom and IT stocks.


On the other hand, major laggards were Realty, Auto and Power stocks. Even the Mid-Cap and the Small-Cap stocks were under pressure.


The INDIA VIX on the NSE was up ~6.5% at 25.60 after being as low as 19.60 and as high as 26.54. It had closed at 24.05 on Wednesday.


"Two big events are lined up in the run up to Diwali. First up is the eurozone summit in Brussels on October 23. Expectations are running high on some sort of a deal on taming the debt crisis. However, scope for disappointment remains given the track record of the European leaders.


Second important event of course will be the RBI meet on Oct. 25. Calls for a pause have been growing for a while. The FM too has accepted difficulty in meeting key goals like GDP, fiscal deficit and disinvestment.


At the same time, the Oil Minister has dismissed talk of a cut in fuel prices citing weakness in the Rupee. Therefore, the RBI’s approach will be closely watched," says Amar Ambani, Head of Research, IIFL - India Private Clients