Sensex slips on IIP data...Nifty holds 5350

Yet another late recovery enabled the NSE Nifty to close above 5350 but it was unable to pull back above the psychological 5400 mark. After opening flat, markets stayed in a narrow range for a couple of hours. But a disappointing IIP reading for December dragged the frontline stocks down. A weak performance by Asian and European markets also dampened the mood partially.

The upswing in the last hour came on the back of strength in index heavyweights like Tata Steel, Bajaj Auto, Sesa Goa, HCL Tech and Wipro.

The BSE Sensex ended at 17,749, down 82 points from the last close. It earlier touched a day's high of 17,890 and hit day's low of 17,627.



The Nifty settled at 5,382, down 31 points. It hit a day’s high of 5,428 and day’s low of 5,341.

Interestingly, market breadth after a long time has turned marginally in the favor of the bears. On the BSE, 1507 stocks declined as against only 1435 advancing stocks and 105 stocks remained unchanged.

The INDIA VIX on the NSE was up ~2.3% to close at 23.83. The index hit day's high of 24.47 and hit day’s low of 22.98.

Among the 30 constituents of the Sensex, Hindalco, Maruti, M&M, Reliance Industries, ICICI Bank and HUL were among the major laggards. On the other hand, Tata steel, Bajaj Auto, Wipro and TCS ended in the negative terrain.

Barring the BSE Metal index, all the other sectoral indices ended in the red. The BSE Realty index was the top loser, down 1%. The BSE Oil & Gas index was down 0.8%, while the BSE Pharma index was down 0.7%. The BSE Mid-Cap index ended almost unchanged while the BSE Small-Cap index also was flat.

India's factory output, as measured by the index of industrial production (IIP), grew by 1.8% in December as against 5.9% in November, data released by the Commerce Ministry showed today.

Industrial production had expanded by a healthy 8.1% in December last year.

Industrial output in the April to December 2011-12 period grew by 3.6% compared to the expansion of 8.3% in the corresponding period a year earlier.

"Markets in Asia closed down and European markets started lower after eurozone finance ministers demanded more austerity measures from Greece and a parliamentary seal of approval for the budget cuts before providing the second round of international aid.

The benchmark index in Athens was down nearly 2%. The euro area finance

ministers are scheduled to meet next Wednesday and are expected to approve the rescue funds, provided Greece has taken the necessary steps.

Concerns that Greece may be staring at a disorderly default has dampened investor confidence despite a strong rebound in equities this year.

Thus, investors will continue to keep close tabs on events out of the euro area (Greece in particular).

Globally, equities have got off to a strong start in 2012. So, don’t be surprised if market players turn a little hesitant in pushing stocks much higher.

There could be further rise in the Nifty towards 5500 in the coming days, provided the FII inflows remain positive and global markets are supportive.

Global events and fund flows will continue to be tracked closely. Inflation for January is due next week along with lots of earnings and overseas macroeconomic data," says Amar Ambani, Head of research, IIFL.

Technically, on the daily charts the Nifty formed a spinning top candlestick pattern, thus indicating an indecisive trend at higher levels. The Nifty on the daily chart has been consolidating in the sideways trading band for almost four days. That resembles rising three methods on candlesticks, which is bullish pattern. In the coming week, we expect the bullish momentum to resume on move past 5400 levels and the immediate target is 5520.