Nifty ends flat, shows smart recovery on short covering

Equity benchmarks showed great resilience in the last minutes of trade to end flat. Overall, it was a short covering-based recovery in markets -- indices had bounced back today after a sell-off in previous five sessions. But the sudden fall in last one-hour of trade, due to selling in heavyweights like Reliance Industries, TCS, Infosys & Bharti Airtel, pulled the Nifty down to test 5700 level in intraday trade by dropping more than 140 points from day's high.

Even the Sensex crashed over 400 points from its intraday high. The markets managed to recover those losses as well in last minutes of trade on short covering and settled the day on a flat note.

According to Sajiv Dhawan of JV Capital Services, "Higher interest rates are obviously a cause of concern for the markets. Inflation is out of control and RBI is not being able to curtail that with any significant measures. So that will have a pressure on input costs and we are going to probably see that in the results of December quarter. Results might be good but the guidances and comments by the managements might be a bit more circumspect. So if we are looking at from the market perspective, the Nifty at 5800 is the level from where we bounced back several times in the past but that was supported by very significant FII fund flows. So unless those resume, we might see a further selling on any significant rally."

The 30-share BSE Sensex closed at 19,196.34, down just 27.78 points and the 50-share NSE Nifty fell 8.75 points to settle at 5,754.10. The broader indices declined 0.67-0.87%. However, the Nifty January futures ended at 54 points premium as against 4 points in previous session.

Nirmal Jain of IIFL feels the markets may drift lower on FII concerns. According to him valuations will become attractive and FII money will return only if inflation eases and political situation stabilises.

Sushil Kedia, FRM, CAIA CMT, President, ATMA said, ''There is a minor chance, less than 1/3rd that the Nifty can rebound all the way to 6,300.''