Sensex manages to snap losing spree; no relief for midcaps

Benchmark indices just about managed to snap a seven-day losing streak, as a 3 percent-decline in index heavyweight Reliance Industries erased much of the gains.

The BSE-Sensex closed at 18704.53, up 23.11 points and the NSE Nifty at 5641.60, up 7.75 points.

There was no respite for midcap and small cap shares, which continued to slide in the absence of any buying support.

Brokers said investors continue to be edgy because of renewed political turbulence, which has increased the possibility of early elections. But more than early elections, investors are worried that the present government may no longer be able to push through any major economic reforms, now that its survival appears to be at stake.

Shares from the oil & gas, realty and capital goods sectors figured among the worst performers.

Pantaloon Retail, DB Realty Purvankara Projects, GMR Infra, Sun TV, SpiceJet, were among the prominent losers in the midcap space, shedding 3-5 percent.

Some market experts like Nilesh Shah of Axis Capital feels it is a good time to look at some of the beaten down secondline shares.

''From a valuation point of view the small cap and midcap portfolio is at a fairly large discount to large cap indices, which current indices are not capturing from an optical point of view,'' Shah said in an interview to CNBC-TV18 in an interview earlier today.

Astrazeneca Pharma, ING Vysya Bank, REC, Satyam Computer, and Gujarat State Petroleum Corp. were among the notable gainers today, rising 3-6 percent.

Investors continued to seek refuge in defensive sectors like FMCG and IT.

Brokerage house Standard Chartered Securities expects valuations of top tier IT companies to sustain as macro-economic concerns leave investors with limited choices.

Key equity indices continued to trade flat with the Nifty below 5650. At 14.36 hrs IST, the Sensex was up 37.89 points to 18719.31, and the Nifty gained 11.60 points to 5645.45. About 1161 shares advanced, 1451 shares declined and 941 shares remained unchanged.

Telecom major Bharti Airtel was the top gainer on the Sensex, rising 2.27% followed by HDFC up more than 2 percent and Tata Motors up 1.96%. FMCG players HUL (up 1.90%) and ITC (up 1.19%) also supported the index.

On the flip side, GAIL was the top loser on the Sensex. It fell 3.38 percent. RIL continues their downward journey (down 2.62 percent). Tata Steel and L&T also dropped more than 2 percent each.

OBC, IOB and Syndicate Bank saw sharp cuts after rating agency Moody's downgraded the standalone ratings for these banks due to falling asset quality, pressure on profitability and capital generation.

Shares in Coal India jumped more than 1.16 percent after the board approved conversion of liabilities of Bharat Coking Coal into preferential shares of worth over Rs 2500 crore.

Key equity benchmarks turned volatile in mid afternoon trade, ahead of F&O expiry.

At 13.49 hrs IST, the Sensex is up 9.55 points or 0.05% at 18690.97, and the Nifty down 0.70 points or 0.01 percent at 5633.15.

European markets opened flat.

Shares of engineering major Larsen & Toubro (L&T) dropped 2.22 percent on the company's announcement that it has acquired 50 percent stake in Future Generali India Insurance Company owned by Kishore Biyani's Future Group for around Rs 500 crore. L&T shares are down more than 16 percent in 2013, but rose more than 60 percent in 2012.

RIL shares are struggling in trade today, down 2.6 percent; after rising 21 percent in 2012, the stock has lost more than 6 percent this year.

Stocks that have touched their 52-week low today: MMTC, SAIL, Tata Steel, DB Realty, Hero MotoCorp.

It has been a lackluster session for the market ahead of expiry on Thursday. The market will remain shut tomorrow on account of Holi. Asian markets are trading mixed. European futures also suggest flat to negative opening for DAX, CAC and FTSE.

Sources indicate a strong possibility of Samajwadi Party withdrawing outside support to the UPA. To survive, the government may now turn to Nitish Kumar's party and accept his demand to give backward status to Bihar. Experts say UPA may woo Mamata Banerjee as her party's support can save the government. Experts, however, rule out a chance of an election this year.

In the afternoon trade, the BSE Sensex is trading up 5 points at 18685 and the Nifty is up 1 point at 5635.

HUL, ITC, Tata Motors, Coal India and HDFC are top gainers on the Sensex.

GAIL, Reliance Industries, Larsen, Tata Steel and SBI are top losers.

Coal India is up 2 percent after the board approved conversion of liabilities of Bharat Coking Coal worth Rs 2500 crore into preferential shares.

L&T is down 2 percent after the company announced to buy 50 percent stake in Future Generali India Insurance Company owned by Kishore Biyani's Future Group for around Rs 500 crore.

OBC, IOB & Syndicate Bank are under pressure as Moody's downgraded the standalone ratings for these banks on falling asset quality, pressure on profitability and capital generation.

Aviation regulator DGCA said it has deregistered 15 aircraft operated by Kingfisher Airlines , paving the way for global leasing companies to take them back. The stock is down 3%.

Indices are trading flat after a small gap down in the opening bell on low volumes. The stock exchanges will remain shut tomorrow on account of Holi. Political uncertainty and weak global cues is keeping the market participants away from the market. The Nifty has tested its 200 Day Moving Average (DMA) of 5620 today.

Asian markets are trading soft this morning on fears that the Cyprus model could be used for future rescue plans.

The Sensex is up 31 points at 18715 and the Nifty up 10 points at 5644.

Coal India, Bharti Airtel, HUL, ITC and HDFC are top gainers on the Sensex.

GAIL, Reliance Industries, Tata Steel, Larsen and Tata Power are top losers.

Brokerage Calls

Credit Suisse is neutral on HUL with a target of Rs 485. Morgan Stanley is equalweight on Reliance Communications. Barclays is overweight on Lupin with a target of Rs 747. Credit Suisse has outperform rating on NIIT tech with a target of Rs 350.

Mahindra Satyam is down 2% as the company delays its amalgamation plan with Tech Mahindra by 6 months. The merger of Satyam with the company will be completed by September 30.

Amtek Auto is up 1% after the company sold its 51% stake in its subsidiaries ARGL and ACIL. MTNL is up 0.5% as the board has approved the proposal to raise Rs 3000 crore via NCD route.

The euro has corrected to 1.287 while the dollar index is currently at 82.9 heading towards a seven month peak of 83.166 scaled earlier this month.

Brent is stable at USD 108 per barrel while gold is trading at USD 1600 an ounce. The rupee is sharply lower on the back of the risk off in global markets.

The Indian government bonds are flat today as dealers stay away from major positions ahead of the end of the financial year.

Indices continue to be listless in the absence of buying support in a week shortened by two trading holidays.The Nifty has broken its 200 Day Moving Average (DMA) of 5620 this morning. A close below 200 DMA, an indicator closely followed by technical analysis, on a consistent basis indicates further weakness ahead.

Political uncertainty is keeping investors edgy. After DMK's pullout from the UPA last week, Samajwadi Party chief Mulayam Singh on Monday revived talk of the Third Front. N Ram, former editor-in-chief at The Hindu believes Samajawadi Party's move don't indicate early elections. ''The Indian politics is facing a period of painful uncertainty'', he added.

The Sensex is down 28 points at 18652 and the Nifty is down 5 points at 5628.

The mood in global markets has turned somewhat subdued despite the Cyprus bail-out. The euro is hit by fears that future bank rescues in the euro zone would come with the same stern conditions seen in Cyprus' deal.

The oil & gas sector which was holding the market yesterday is now beginning to crack today. Heavyweights like Reliance Industries and ONGC are down 1 percent each. Reliance Industries has slipped below Rs 800 mark.

Larsen & Toubro has acquired 50 percent stake in Future Generali India Insurance Company owned by Kishore Biyani's Future Group for around Rs 500 crore.

Public sector lenders Indian Overseas Bank (IOB), Oriental Bank of Commerce (OBC) and Syndicate Bank were down 2-3 percent on Tuesday after the ratings agency Moody's downgraded the ratings of these banks on weak asset quality.

Suzlon Energy has successfully completed its USD 647 million bond issue. The proceeds from the issue will be used to pare its existing foreign currency debt. The stock is up 1 percent.

The rupee has slipped to 54.3525/3600, tracking negative local shares and heavy losses in the euro in Asian trade.

Key indices were sluggish in early trade Tuesday, as the ongoing political uncertainty continue to weigh on sentiment. On Monday, Samajwadi Party chief Mulayam Singh revived talk of the Third Front, which political experts say is an indirect indication of early elections.

The BSE Sensex was down 46 points at 18635, and the Nifty was down 10 points at 5623.

L&T Finance Holdings shares were up 2 percent, though it will be parent L&T which is merging its general insurance business with Future Generali.
Other key gainers at this hour included Cummins India, Wockhardt and Coal India, up between 1-2 percent.

Realty and oil & gas shares were under pressure, failing to build on Monday's gains.

Shares of Indian Overseas Bank, Oriental Bank of Commerce and Syndicate Bank were down 2-3 percent after rationg agency Moody's on Monday downgraded its Standalone Bank Financial Strength Rating (BFSR) for these banks, citing falling asset quality, pressure on profitability and capital generation.

Rahul Chadha of Mirae Asset Global says his fund house continues to remain cautious on the market near term, largely as political uncertainty could aggravate the ongoing slowdown. He is recommending that investors should put their money in defensive stocks in the short term. Chadha is bullish on pharmaceutical and IT stocks. He recommends buying cement stocks at lower levels. Chadha says there could be further upsides in oil marketing companies if the government is able to hike diesel prices.

But brokerage house Morgan Stanley feels the pessimism could be overdone.

"As usual when share prices are falling, the positives take a back seat but it is worth pointing out that valuations are attractive, the growth cycle is at an inflexion point, and that bad sentiment is a good contra-indicator for stock returns. We stick to our portfolio approach of large-cap cyclicals," the brokerage said in a note to clients.

Sidharth Bhamre of Angel Broking says the Nifty could slip to 5570 in the next couple of sessions and then recover to around 5600 levels.

He is bearish on HDFC Bank, and recommends a short sell with a price target of Rs 577. Bhamre says some strong hands have created short positions in HDFC Bank in the last couple of sessions. He is bearish also on UltraTech Cement and recommends short selling it with a price target of 1715, as he expects the support level of 1840-1850 to be breached.

Technical analyst Sukhani is highly bearish on realty stocks and sees stocks like DLF and Unitech sliding sharply in the coming sessions.