Another volatile day as the indices decline

Yet another volatile day in the market as the indices are trying to get a sense of direction on mixed signals. The results season is ahead of us and the market is cautiously optimistic. However, global cues in the form of oil prices and investment flows continue to cause a few worries.

After opening firm the indices declined soon to touch the lows of the day before noon. Early afternoon, the indices bounced back into positive territory only to give up and close in the red. Sensex closed at 6550, down 54 points and the Nifty at 2053, down 11 points.

Among index stocks, Tata Chemicals, ONGC and Bajaj Auto were the biggest percentage gainers while Tata Motors, Maruti and Gujarat Ambuja were the top losers.

On Monday, US markets bounced back from early losses to close with reasonable gains. Declining oil prices and news of large mergers helped turn around the sentiment. Insurance giant AIG, facing regulatory investigations, bounced back on news of a possible settlement. Oil giant Chevron-Texaco announced acquisition of smaller rival Unocal for $16.4 billion. There is also speculation about a possible bid by HSBC to acquire investment bank Morgan Stanley. Morgan Stanley is facing severe internal management issues with many top executives leaving.

Oil touched a new high of $58.28 in morning trades before declining and closing at $57.01 to a barrel. OPEC has indicated that it is willing to increase production by half a million barrels a day to cool prices.

Telecom major Bharti Tele announced plans to invest around $850 million in the current year for expansion. A large part of the proposed investments will be spent on mobile services. The company is not planning to raise fresh equity. The stock recovered from its morning losses on hearing this announcement.