Choppy benchmarks hover around psychological levels

Local frontline indices continue to oscillate around the neutral line in the mid afternoon session of trade as investors appeared reluctant to build up positions in large cap stocks and instead, chose to trim down positions at every rise. The indices recovered some part of losses after touching intraday lows in the mid morning session as rally in real estate majors like Unitech and HDIL which garnered around six percentage points each lent some support. The downside risks for the local markets also got capped because of around 2 percent surge in NTPC after reporting provisional net profit growth of 24% to Rs 25.05 billion for the quarter ended March while provisional sales for last quarter of the fiscal year was Rs 144.9 billion, up 17.8% from a year earlier. But a decline of around half a percent point in BSE's Teck counter restricted the bourses from bouncing back into the green. On the global front, cues remained subdued as most Asian indices settled in the mixed territory while the European markets after beginning with marginal gains have also turned mixed.

Meanwhile, broader markets continued to stage resilient performance as they outclassed their larger peers for the fourth straight day after investors showed huge buying interests in undervalued shares from the midcap and small cap space. The market breadth on the BSE too remained strongly in favor of advances in the ratio of 1761: 1110 while 104 scrips remained unchanged.

The BSE Sensex lost 32.76 points or 0.17% at 19,654.06. The index touched a high and a low of 19,811.14 and 19,550.55 respectively.

The BSE Mid-cap and Small-cap indices climbed 0.71% and 0.93%, respectively.

On the BSE sectoral front, Realty up 2.72%, CD up 1.73%, Power up 0.87%, PSU up 0.58% and Auto up 0.32% were the gainers.

On the flip side, Teck down 0.46%, IT down 0.27%, Bankex down 0.24%, FMCG down 0.24% and Metal down 0.07% were the only losers.

The top gainers on the Sensex were Reliance Infra up 1.69%, Hero Honda up 1.51%, NTPC up 1.38%, Tata Motors up 1% and Bajaj Auto up 0.75%.

On the flip side, Wipro down 2.13%, Bharti Airtel down by 1.44%, Hindalco down 1.34%, ITC down 1.09% and TCS down 0.96% were the top losers on the index.

Meanwhile, Global tea prices continue to remain firm despite the increase in production in last calendar year as a strong supply response to high prices was witnessed. Lower production in India due to weather related troubles coupled with high global prices have boosted tea prices in Indian markets as well and going forward the commodity is expected to remain bullish for at least another couple of quarters.

In fact global tea prices have been quite volatile in the past two years, with prices in 2008 and 2009 respectively swinging within a 25-30% price range. The average growth in prices in 2010 was again over 10%. High prices yielded a strong supply response as well. While there were wide swings, on the whole tea prices have remained relatively strong in historical context in both Indian and global markets.

The industry has remained firm even as global production increases. It was apprehended that strong supply response to high prices of the commodity seen last year will bring down prices this year. However, production in India has been somewhat lower in 2010 owing to weather related problems. The trend has not changed in 2011 wither and production was down in the month of January as well. Although the decline in production has been small, given the continued increase in domestic demand, prices have remained firm.

Looking at the global scenario, markets continue to remain in deficit mode following the sharply lower production in 2008. While there has been strong growth in production in 2010 which hit record high level of 320 million KG, the sharp increase was on a low base of 2009 and has failed to increase stocks much. Compared with production in 2008, the increment in global production is just over 2%. World tea stocks continue to remain at record low levels and have been supporting prices in both Indian and global markets.

The S&P CNX Nifty lost 5.75 points or 0.10% at 5,904.30. The index touched high and low of 5,944.45 and 5,868.80, respectively.

The top gainers on the Nifty were Sesa Goa up 3.38%, GAIL up 2.83%, RPower up 2.21%, BPCL up 2.02% and Hero Honda up 1.62%.

On the other hand, Cairn down 3.75%, Wipro down 3.65%, Bharti Airtel down 2.30%, Hindalco down 1.49% and SAIL down 1.48% were the major losers on the index.

Asian markets were trading mixed, Seoul Composite down 0.17%, KLSE Composite down 0.01% and Nikkei down 0.32%. While the gainers were Hang Seng up 0.56%, Straits Times up 0.57% and Shanghai Composite up 1.14%, Jakarta Composite up 1.14% and Taiwan Weighted advanced 1.69%.

The European markets began on a flat note with positive bias and were currently trading mixed, France's CAC 40 down 0.47%, Germany's DAX up 0.09% and Britain's FTSE 100 up 0.32%.

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