Nifty ends below 200 DMA on expiry; all sectors dip

Indian equities were slaughtered on Thursday and broke the important technical levels, led by sell-off across sectors. Indices closed the day of January series expiry as well as entire series with sharp cut. The benchmark Nifty shut shop below the 200 daily moving average (DMA) of 5,619 and touched the four and half months low at close today.

Veteran technical chartist Louise Yamada of Louise Yamada Technical Research Advisors said Nifty can see a pullback to 5500 if it remains below 5700. The 50-share NSE Nifty fell 83.10 points or 1.46% to 5,604.30.

Markets is still having fear about likely slowdown in the year 2011 due to likely further hike in policy rates by RBI to control rising inflation. RBI hiked key rates by 25 basis points on Tuesday and revised inflation to 7% versus the 5.5% it had projected in its November 2 quarterly meet.

Abhijit Chakraborty, Senior VP - Institutional Equity, Fortune Financial said, "The market is still in the process of adjusting to the fear of lower corporate earnings growth this year and the macro headwinds deterioration, whether it's inflation or current account deficit and how that could have any impact on the overall GDP growth. At the same time the RBI policy also outlines certain other macro headwinds."

"Fiscal deficit is also likely to be very high. If there is going to be a strain on the manufacturing sector and less of spending from the private sector then the overall GDP growth could also come under pressure. We are very close to the 200 DMA and if we do go below that then I think the market remains sluggish for a pretty longer period of time."

We had seen highest ever inflow of foreign money i.e. Rs 140,497.20 crore in 2010 while the January of 2011 saw net outflow of around Rs 4,000 crore. RBI Governor D Subbarao said if western region of world improves their growth then we would see outflow of money from India, which will dampened the sentiment of markets further. Experts too agreed that emerging markets may underperform.