Flimsy local markets relinquish most the intraday gains; settle flat

All hopes of a comeback rally for the increasingly vulnerable Indian stock markets got shattered in Tuesday's session as many heavyweight stocks that saw short covering earlier in the day lost ground by late trade. Bourses snapped the four day losing streak a day after taking a nasty laceration and drifting to the lowest close in four months, only with moderate gains despite surging well over a percent during the session. Sentiments remained sanguine for most part of the day as optimistic global cues continued to persuade bulls to come out of their shelter and hunt for bargains. While optimistic reports from the domestic front like foreign direct investment (FDI) flows into India surging 43% in April from a year earlier to $3.1 billion and the Direct tax collection growing 23% to Rs 101,600 crore in the first quarter of the current financial year, buttressed local sentiments. However it seemed like the bears had the last say as they stalled the resurgence of the benchmarks in late trade and took profits off the table. On one hand it was the bargain hunting in information technology and oil and gas stocks that prevented the frontline indices from sinking in the red while on the other it was the profit booking in high beta realty and capital goods counters that capped the upside chances for the local bourses. The tepid close looked shoddier because of the fact that markets across the Asia and Europe displayed energetic performance and rallied to higher levels. Meanwhile, optimists were of the view that investors are waiting for a catalyst to buy in India since they sense that domestic markets have bottomed out for now.

The relief rally fizzled out by the end of trade as investors resorted to hefty profit booking and the benchmarks eventually finished the session around the important psychological 5,300 and 17,550 levels. The NSE's 50-share broadly followed index Nifty, added one third of a percent points and settled above the crucial 5,250 support level, while Bombay Stock Exchange's Sensitive Index, Sensex only managed to hit a half century and close above the important psychological 17,550 level. The broader markets too failed to recuperate the hefty losses incurred on Monday and once again drifted into the negative terrain by the end of trade. The midcap index slipped by 0.21% points while the smallcap index eased by 0.43% point. On the sectoral front, it was the Information Technology counter which settled as the top gainer with 1.16% gains, as majors like Infosys and TCS, which get at least 75% of their revenue from software exports, climbed as concerns about a potential Greek debt default eased. Huge buying interests were also seen in badly butchered Oil and Gas counter as heavyweight Reliance Industries surged by over one and half a percent after the recent seven straight session downtrend. Meanwhile, fertilizer stocks rallied in the session on reports that Government is mulling feasibility of cash based subsidy for fertilizer companies. On the other hand it was the high beta Realty counter which failed to recover and once gain languished at the bottom of the table with 1.78% losses as majors like DLF and Unitech dived by 2.92% and 3.87% respectively. While the Capital Goods counter too bore the brunt of selling pressure and shaved off 0.67% as heavyweight L&T declined by three fourth of a percent. The markets gained on weaker volumes of over Rs 1.26 lakh crore while the turnover for NSE F&O segment also remained on the lower side compared to Monday at over 1.10 lakh crore. Market breadth crisscrossed by the end of trade and ended on a negative note as there were 1125 shares on the gaining side against 1667 shares on the losing side while 106 shares remained unchanged.

Finally, the BSE Sensex rose 53.67 points or 0.31% to settle at 17,560.30 while the S&P CNX Nifty gained 17.95 points or 0.34% to settle at 5,275.85.

The BSE Sensex touched a high and a low of 17,714.88 and 17,504.27 respectively. The BSE Mid cap and Small cap index were down by 0.21% and 0.43% respectively.

The major gainers on the Sensex were TCS up 3.24%, HDFC up 1.78%, RIL up 1.67%, Hero Honda up 1.39% and HDFC Bank up 1.15%.

On the flip side, JP Associate down 3.92%, DLF down 2.92%, Reliance Infra down 2.56%, SBI down 1.38% and ICICI Bank down 1.06% were the top losers on the index.

The major gainer on the BSE sectoral space were IT up 1.16%, Oil& Gas up 0.90%, TECk up 0.89%, Health care (HC) up 0.44% and Auto up 0.33%. While the major losers in the space were Realty down 1.78%, Capital Goods (CG) down 0.67%, FMCG down 0.61%, PSU down 0.60% and Power down 0.49%.

Meanwhile, After the three months of consecutive decline, foreign direct investment (FDI) flows into India jumped by 43% to $3.12 billion in April 2011, against $2.17 billion received in April 2010.  This increase in FDI inflow is mainly because of recovery in global markets, mainly in western economies. 'The figure is showing a recovery in the global markets, especially in European economies,' an official said.

In April, the sectors that attracted the maximum FDI, includes service sector ($658 million), construction activities ($311 million), power ($256 million), computers and hardware ($96 million), telecommunications ($46 million), Automobile industry ($266 million), computer software and hardware ($36 million) and housing and real estate ($38 million).

During April, the maximum FDI came from Singapore ($1.17 billion), followed by Mauritius ($976 million), Japan ($235 million), France ($220 million) and Cyprus ($170 million). The major investors in India are Mauritius, Singapore, the US, UK, Netherlands, Japan, Germany and the UAE.

The increase of 43% in April is viewed as a positive indication in the global recovery; the FDI inflows registered a decline of 48% ($1.2 billion) in January, 30% ($1.04 billion) in February and 11% ($1 billion) in March. This continues reduction in FDI inflow was due to the slow global recovery and debt crisis of European economies. During 2010-11 foreign direct investment reduced by 25% to $19.4 billion from $25.83 billion in 2009-10, and in 2009-10 FDI fell by 5% to $25.83 billion from $27.33 billion in 2008-09.

The Department of Industrial Policy and Promotion (DIPP) has also initiated steps, including consolidation of all related rules and regulations into a single document, to boost FDI in the country. By relaxing FDI norms, the DIPP had allowed Indian companies to issue equity against the import of capital goods and liberalized the conditions for foreign investment for production and development of seeds.

The S&P CNX Nifty touched high and low of 5,322.45 and 5,257.00, respectively.

The top gainers of the Nifty were TCS up 3.53%, IDFC up 3.01%, Sun Pharma up 2.15%, Reliance up 1.88% and Grasim up 1.81%.

On the flip side, JP Association down 4.11%, DLF down 3.52%, Reliance Infra down 2.79%, BPCL down 1.94% and Maruti down 1.79% were the major losers on the index.

European markets were trading in green. France's CAC 40 surged 1.09%, Britain's FTSE 100 rose 0.73% and Germany's DAX up 0.75%.

All the Asian equity indices finished the day's trade in the positive terrain on Tuesday concerns about a potential Greek debt default eased. The sentiment in the region got a fillip after Luxembourg's Jean-Claude Juncker, who leads the group of euro zone finance ministers, said that a solution to the Greek's fiscal crisis will be found. Japanese Nikkei rose more than a percent in the trade led by auto stocks climbing on bullish comments from a brokerage but volume was thin and most players were on the sidelines ahead of a Federal Reserve policy meeting. Most of the Asian counterparts snapped the day's trade with a gain of more than a percent.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2,647.68	26.43	1.01
Hang Seng	21,850.59	251.08	1.16
Jakarta Composite	3,794.94	65.82	1.76
KLSE Composite	1,560.79	1.60	0.10
Nikkei 225	9,459.66	105.34	1.13
Straits Times	3,053.51	39.91	1.32
Seoul Composite	2,048.17	28.52	1.41
Taiwan Weighted	8,597.62	66.94	0.78

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