Sensex ekes out slim gains...Auto shares weaken

After falling for three straight trading sessions, the Indian equity benchmarks indices finally managed a positive session but the advance was quite muted, indicating that the underlying sentiment remains fragile. Key Indian stock indices had taken a beating in the past three days on the back of a largely disappointing Union Budget and due to growing speculation of a delay in rate cuts from the RBI.

Crude oil remains a big pressure point for the Indian economy, especially with the Government dithering over the issue of fuel price hike. The talk of a revision in fuel prices has been in the air for quite some time but timing and quantum remains a mystery as of now.



High oil prices, caused either by supply concerns or geopolitical tensions, could be the next threat to global growth, IMF chief Christine Lagarde said today in New Delhi. "The focus is on the price of oil and concerns that are "either supply-driven or come from geopolitical tensions," she said.

The real worry for our markets is the Government’s inability to push hard policy decisions in the face of limited political space available to it. But then that has been the case with UPA regime for a very long time, and may not go away till the 2014 general elections.

The BSE Sensex ended at 17,316, up 43 points or ~0.25% over the previous close. It had earlier touched a day’s low of 17,221 and a day’s high of 17,410. It opened at 17,308.

The NSE Nifty settled at 5,275, up 18 points or 0.34% over the previous close. It earlier touched a day’s low of 5,233 after opening at day’s high of 5,297.

Interestingly, the INDIA VIX on the NSE plummeted 4.5% at 21.94 after being as high as 22.97 and as low as 21.36. It had closed at 22.97 yesterday.

Among the BSE sectoral indices, the Consumer Durables index was the top gainer, up 2.35%, while the Realty index gained 1.44%. The FMCG index was up 1% and the Pharma index ended higher by 0.9%. The Auto index ended lower by 1.5%.

Pharma, Bankex, Oil & Gas and Power indices made decent gains. The Capital Goods index ended absolutely flat while Teck, IT, Metals and PSU were marginally up.
The BSE Mid-Cap index rose 0.5% while the BSE Small-Cap index ended almost unchanged.

Notable gainers on the Sensex and the Nifty were Sun Pharma, HDFC, Jindal Steel, JP Associates, PNB, BPCL, SAIL, Cairn India, Tata Steel and DLF.

Among the top losers on both the indices were Tata Motors, Coal India, Hindalco Industries, HCL Tech, Bajaj Auto, Axis Bank and Grasim Industries.

After opening with smart gains, the Indian stocks turned choppy and were unable to hold on to early gains, sending the NSE Nifty below the 50 Day Moving Average (DMA). Major laggards were in the Auto space with the likes of Tata Motors, Bajaj Auto and Hero Motocorp being the top losers.

Sentiment was further hit by weakness across Asian and European markets. However, after surrendering most of the morning gains in the early afternoon trade, the Nifty recovered again to close above the 50 DMA.

“In the coming days, the undercurrent is likely to remain cautious amid concerns about the Government's fragile finances and its overall impact on economic growth, inflation and interest rates. The only factor that might save Indian markets from more pain is the money flow from overseas investors. Even that could dry up at some point. The bottomline is that things continue to be uncertain. A measured and discipline approach would hold you in good stead in the medium- to long-term,” says Amar Ambani, Head of Research IIFL.

Technically, although the 50 DMA has proved to be a good support for the Indian market all eyes would be on the crucial support of 200 DMA, which is placed at 5160 levels.

The trend in the Indian market was in contrast to weakness across Asian markets following another tepid session on Wall Street and a fall in European stocks. Japanese financial markets were shut today for a public holiday.

The Shanghai Composite index in China was down ~1.4% at 2,376. The Hang Seng in Hong Kong was down 1% at 20,888.

The Kospi in Seoul was down 0.2% at 2,042 while the Straits Times index in Singapore was up 0.8% at 3,013. The Taiex in Taiwan was down ~0.9% at 7,972 while the S&P/ASX 200 index in Australia dropped ~0.4% at 4,275.

Australia’s dollar approached a 10-month high against the yen after minutes showed that the Reserve Bank of Australia left borrowing costs unchanged this month after seeing somewhat less downside risk to the economy.

Meanwhile, China has raised retail gasoline and diesel prices for the second time this year, by 6.4% and 7%, respectively. The move is aimed at easing losses faced by the nation's refiners in view of rising global crude oil prices and a decline in domestic consumer price inflation.

Major mainland Chinese banks were trading lower ahead of their earnings results due later this month.

European stock indices fell, dragged lower by weakness in banks and miners amid concern about China's economic growth. Auto makers were down after China increased gasoline prices. The Stoxx Europe 600 index last traded down 1%.