Global cues were weak today as Asian markets slipped after the decline in US indices yesterday. Crude oil prices inched above $72 per barrel bringing back concerns of inflation and higher interest rates. Settlement of June series in the F&O segment due tomorrow added to the uncertainty.

Markets opened with significant losses of over 2 per cent each for the frontline indices, but recovered soon after. After moving within a band till early afternoon, indices moved ahead on short covering and broke into positive territory by mid-afternoon.

The last half hour saw some selling at higher levels and the indices slipped back into the red, closing the day with marginal losses.

Sensex closed with losses of 21 points at 10130 and the Nifty lost just one point to close at 2981. Nifty July futures ended at a discount of 27 points to the spot index.

Oil stocks were weak following the recovery in international crude oil prices. HPCL was the biggest loser among index stocks, closing nearly 4 per cent lower.

ONGC gave up more than 2.5 per cent and kept the indices in the red.

Steel stocks gave up part of their gains from yesterday. SAIL lost more than 3 per cent and Tata Steel closed almost a per cent lower.

Suzlon was another stock which declined after yesterday's rally and ended nearly 2.5 per cent lower.

Pharma stocks declined on fears that regulatory approvals for key drugs would be delayed and US prices of some key generic drugs launched recently may decline further. Ranbaxy and Dr. Reddy ended with losses of over 2.5 per cent each. Cipla lost nearly a per cent.

Banking stocks continued to decline on fears of rising interest rates which could lead to lower margins. SBI and ICICI Bank gave up around 2 per cent each. HDFC slipped nearly 3.5 per cent and HDFC Bank ended almost 2 per cent lower.

Jet Airways gave up another 3 per cent as speculation about a settlement with Air Sahara involving a cash payout remained.
Two-wheeler stocks had a good day with Bajaj Auto adding more than 4 per cent to become the best performer among index stocks.

Hero Honda added nearly a per cent.Among other auto stocks, M&M added nearly 2.5 per cent.

VSNL continued it's up trend and gained another 4 per cent, taking total gains over the last two sessions to 14 per cent.

Reliance Industries recovered from mid-session weakness and ended more than 1.5 per cent higher.

Among engineering stocks, ABB added more than 3.5 per cent and BHEL ended nearly 1.5 per cent higher.

Select technology stocks surged in afternoon trades after remaining subdued in morning trades. TCS gained nearly 3.5 per cent and Wipro added over 2 per cent.

Dabur, Hindalco, Gail and Reliance Energy were the other major gainers.

Global markets / crude oil

US markets declined yesterday ahead of the US Fed meeting starting today to decide on short term interest rates. Markets expect yet another hike of 25 basis points tomorrow. Lower sales forecast from major companies like GM and negative developments for Qualcomm affected sentiment.

The Dow lost nearly 1.1 per cent and the S&P 500 ended nearly a per cent. Technology stocks were once again worse off and lost more than 1.5 per cent.

Asian markets also declined following the weakness in US indices yesterday. Japan was the biggest loser, ending nearly 2 per cent lower. Indonesia lost nearly a per cent and South Korea declined 0.7 per cent. Other markets like Hong Kong, Singapore, Malaysia and Shanghai recovered from early lows and closed with modest losses.

Thailand was the only major gainer, ending more than a per cent higher. Among smaller markets, Karachi soared nearly 4.5 per cent.

The subdued trend has spread to European markets as well and major indices are trading with marginal losses.

Crude oil prices gained yesterday on fresh concerns of violence in major oil producing countries in the Middle East. Belligerent statements by the Iranian government which is trying to buy more time to respond to a peace deal also affected the sentiment. Near month NYMEX futures closed at $71.92 per barrel yesterday. The commodity is trading above $72 per barrel in early European trades today.

Large-cap news flow

• Jet Airways has clarified that it did not extend the share purchase agreement with Air Sahara because of commercial reasons and in the interest of shareholders. The airline said delays in getting government clearances and policies relating to airline mergers affected the deal. The airline has filed a transfer petition before the Supreme Court to transfer all the cases relating to the dispute with Air Sahara to the apex court.
  
  
• SAIL would invest Rs1,550 crore to upgrade its Salem Steel Plant. The expansion and upgrade would involve installation continuous slab caster and increase in cold rolling capacity.
  
  
• A consortium including Videocon Industries, HPCL, BPCL and Gail India have signed the exploration and production sharing agreement for an onshore oil exploration block in Oman.

Mid-Cap Action

Mid-caps and small caps declined further today, extending their losses to the third straight session. Most major sectors and popular stocks remained under pressure and smaller stocks have already shed last week's gains over the large caps. At one point the mid-cap index was trading nearly 2 per cent lower, but recovered in the afternoon.

The CNX Mid-Cap index ended with losses of 29 points, or 0.76 per cent, to end the day at 3795. Market breadth on the NSE was negative throughout the session.

BSE mid-cap index lost 0.47 per cent and the BSE small cap index declined 0.93 per cent today.

Himatsingka Seide, Repro India, Gitanjali Gems, JP Associates, Pritish Nandy Communications, Jindal Saw and Sasken were among the major mid-cap losers.

Softpro Solutions, India Infoline, Excel Crop Care, Bluestar Info, Adlabs, Pudumjee Pulp and Shriram City Union were among the mid-cap gainers.

Mid-cap news flow

• Aban Loyd has completed the acquisition of a one-third stake in a Norwegian offshore services company.
  
  
• Dishman Pharma would make regulatory filings in Europe for disinfectant bulk actives. Some of these products are not offered by any other company and Dishman expects good revenue growth from these products over the next 5 years.
  
  
• Elecon Engineering has announced a stock split in the ratio of 5 shares of Rs2 each for every Rs10 share.
  
  
• Sonata Software has opened a new sales office in Chicago, US.
  
  
• Mysore Cements has declined to confirm media reports that a German cement company may pick up a stake in the company. Mysore Cements admitted that talks are on with various parties and no decision has been taken.
  
  
• 3i Infotech said an insurance company based in Maldives has selected its insurance software suite.
  
  
• The share buyback offer of SRF would open on 03 July for a period of one year. Shares would be bought at a price not exceeding Rs250 per share.
  
  
• UTV Software has entered into agreements with overseas production companies to co-produce animation movies. The deals are worth a total of $14 million.
  

*Disclaimer: The author may have positions in some of the stocks specifically mentioned above at the time of writing this article. This analysis / report is only for the purpose of information and is not an investment advice. Readers are advised to consult a certified financial advisor before taking any investment decisions. While efforts have been made to ensure the accuracy of the information provided in the content the author or publisher shall not be held responsible for any loss caused to any person whatsoever.

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