Nifty closes flat in dull trade...Fails to end above 5k

The BSE Sensex ended at 16,438, gaining by 0.13% or 21 points. Market participants heaved a sigh of relief as a boring trading session finally came to an end with the key indices finishing nearly flat. After opening with a slight positive bias, the Indian markets did show some strength in the first half but the upswing was short lived, as the frontline indices erased all the day's gains in the second half. The key indices lost steam after the European markets surrendered some of the early gains. The BSE Sensex ended at 16,438, gaining by 0.13% or 21 points. It had earlier touched a day’s high of 16,544 and a day’s low of 16,410. It opened at 16,500. The NSE Nifty settled at 4990, almost unchanged. It touched a day’s low of 4,982 and day’s high of 5,020. HCL Tech, Cairn, Wipro, Coal India, Ranbaxy, Maruti, Bank of Baroda, TCS, Bajaj Auto and ONGC were among the notable leaders on the Sensex and the Nifty. ACC, BPCL, IDFC, SAIL, Grasim, ITC and Sterlite Industries were the notable losers on both the indexes. The INDIA VIX on the NSE gained by 1.6% to close at 24.03. It hit days high of 25.33. It hit a low of 22.70. The market breadth was positive, 1421 stocks advanced and 1281 stocks declined. The NSE Nifty did manage to trade above the 5,000 mark while the BSE Sensex crossed 16,500 level in intraday trade. However, both of them were unable to end above the psychological levels. The decline was led by FMCG, Consumer Durables, Pharma and Capital Goods. On the other hand, the BSE IT index was the top gainer, up 1% followed by the BSE Teck index, up 0.7% and the BSE Realty index rose 0.4%. The broader indices underperformed the Large-Cap peers, with the BSE Mid-Cap index ending lower by 0.25%, and the BSE Small-Cap index ending almost unchanged. "For India, the driving force in the near term will be corporate earnings from some of the big names, besides data on Q4 GDP, manufacturing PMI, exports and monthly auto sales. The Nifty has recovered smartly from recent lows. A further advance from here hinges on multiple factors - FII flows, policy announcements and global cues. While the short term outlook has turned slightly positive, the Nifty must cement its position above the breakout levels for at lease a couple of trading sessions," says Amar Ambani, Head of Research, IIFL. Markets remained in the positive territory in the first half, tracking healthy gains in other Asian markets. The Nikkei in Tokyo gained 0.7% while indices in Hong Kong, China, South Korea and Australia all were up ~1% each. Taiwan's main index surged by ~3% today after the ruling party proposed a taxation system that seeks to ease the burden on individual investors on trading gains. The Taiex’s advance was the biggest among Asian benchmark indexes today. In Europe, the FTSE index was nearly flat, while the CAC index and the DAX index both were up marginally. Spanish stocks came under renewed selling pressure amid growing tension over the nation's deteriorating banking sector. The IBEX 35 index was down ~2.4%. US stock market futures were pointing to a positive opening on Wall Street when investors return from a long weekend on Tuesday. In the currency market, the rupee declined versus the US dollar, retreating slightly after gaining in the past three sessions as the euro came under renewed pressure in the overseas market. Dollar purchases by domestic oil companies and corporates was also seen dampening the sentiment for the rupee. Dollar demand from oil refiners typically rises towards the end of each month. The rupee touched a day's low of 55.79 after opening at the day's high of 55.39 as against the previous close of 55.19. It touched 55.0100 yesterday, the strongest level since May 22. The rupee touched an all-time low of 56.3875 last week and has lost 7.5% this quarter. The euro was poised for the biggest monthly decline since September. The 17-nation currency was 0.3% from the lowest since July 2010 after yield premiums on Spain’s securities over Germany’s rose to the most in 17 years. The Dollar Index traded near the highest in 20 months as lingering worries about Europe’s turmoil boosted demand for safe haven assets. Morgan Stanley has upgraded Reliance Industries (RIL) to "equal-weight" from "underweight", maintaining its target price at Rs. 703, citing attractive valuations. Despite Morgan Stanley's "unconstructive" view on RIL's core business, the US investment bank says that the Mukesh Ambani-owned company was trading at multi-year lows, making its valuations compelling. RIL's ongoing buyback programme is also gaining momentum, Morgan Stanley says, seeing little downside for the stock. RIL stock hit its lowest intraday level since March 2009 on May 16. Separately, Morgan Stanley has downgraded its view on India's telecom sector to "in-line" from "attractive", citing increased regulatory risks tied to the spectrum auction, and relatively weaker 3G outlook. The brokerage has cut its rating on Reliance Communications (RCOM) to "underweight" from "equalweight", and slashed its target price to Rs. 51 from Rs. 109, citing a weaker balance sheet. RCOM faced the highest regulatory risk, it says. Morgan Stanley has also cut Idea Cellular to "equalweight" from "overweight", while reducing its target price to Rs. 87 from Rs. 134, citing its smaller balance sheet and a 32% outperformance in the last 12 months. Bharti Airtel remains the only "overweight"-rated stock in Morgan Stanley's telecom coverage, with a target price of Rs. 366, down from Rs. 488 earlier.