Sensex consolidates as global stocks cool off

After Tuesday’s smart rally, the Indian equity markets ended with modest losses amid weakness in global markets and due to concern about the fate of pending reforms. It was a listless session, as market participants looked for fresh catalysts to push the main indices higher from here on. The NSE Nifty did manage to surge past the previous day’s high though. However, the Nifty was stuck in a ~30-point trading band throughout the session. The index held on to the 5400 mark after opening below the crucial level, but was unable to surge past 5440. The Sensex ended at 17,846, down by 38 points or 0.2% over the previous close. It had earlier touched a day’s high of 17,912 and a day’s low of 17,800. It opened at 17,827. The Nifty settled at 5413, down 8 points or 0.2%. It touched a day’s low of 5,395 and a day’s high of 5,433. Bharti Airtel, IDFC, Sesa Goa, NTPC, Sterlite Industries, PNB, Tata Power, HDFC and RIL were among the notable laggards in the Sensex and the Nifty. Ranbaxy, BPCL, BOB, Infosys, Dr Reddy’s, Coal India and Kotak Mahindra Bank were the top gainers in the Sensex and the Nifty. The INDIA VIX on NSE ended lower by 1.8% at 16.00. It hit a day’s high of 16.53 and a day’s low of 15.79. The market breadth on the BSE was negative, with 1459 stocks ending lower and 1341 stocks closing higher. Globally, Asian markets ended with losses, with the Hang Seng being among the top losers, as investors awaited the outcome of Greek prime minister's meeting with European leaders and the release of the FOMC minutes. The drop in Asian shares came after US equity indices slid on some profit taking in late Tuesday trade. The Australia S&P/ASX 200 closed down 0.2% at 4,376.00 while Japan's Nikkei Average ended down 0.3% at 9,131.74. Disappointing earnings and weak Japanese trade figures dented sentiment in Asian trade. Hong Kong’s Hang Seng Index was down 1%, while the Shanghai Composite index slipped 0.5%. The European markets were also trading with a negative bias. The FTSE index in UK was down 1%, while the DAX index in Germany was down 0.8% and the CAC index in France was down 0.5%. US stocks ended lower on Tuesday, with the S&P 500 index retreating from a four-year high. The S&P 500 slipped 0.35%, while the Nasdaq index was down 0.3% and the Dow Jones index ended lower by 0.5%. A regional stock index fell from a three-month high, after Japan reported a wider-than-expected trade deficit for July. The MSCI Asia Pacific Index slid 0.5% to 120.58 as of 4:48 p.m. in Tokyo, with almost two shares falling for each that rose. Energy producers, raw material suppliers and IT companies posted the biggest declines among the 10 industry groups in the MSCI Asia Pacific Index. The latest FOMC minutes are also due out later today in the US. Reports on US housing and durable goods this week are expected to show that the US economy remains on course for steady growth. Back home, the Parliament remained disrupted for the second straight day in the wake of the CAG report on coal block allocation. BJP said the UPA Government should quit and fresh elections be held in the country. However, the saffron outfit seems to be the only political party demanding the PM’s exit. Separately, the banking sector was in focus as hundreds of bank employees began a two-day nationwide strike to oppose banking sector reforms. "The biggest driving force behind the ongoing rally in Indian shares is strong FII inflows. In fact, for the year as a whole, FII investments into Indian equities have been pretty solid at ~US$11bn. Such large overseas portfolio capital has entered Indian shores despite dimming prospects for the domestic economy. It could mean FIIs still find India among the best places to invest despite a plethora of problems," says Amar Ambani, Head of Research, IIFL. The near-term trend for Indian equities remains upbeat in line with the positive momentum seen across global markets. The current upmove could be negated on a close below 5350. On the higher side, the next resistance is seen around 5500.