Nifty ends below 5500; capital goods, FMCG dip

Indian equity benchmarks broke the narrow range of 5500-5550 seen since last Friday to close the today's trade below the 5500 mark. Rate hike fears and disappointing industrial output data shook the market a bit today.

Experts believe disappointing industrial output data for the month of April clearly suggests that there is a slowdown in the economy and said government should start spending on infrastructure now. Even food inflation was more than 9% so experts feel that there would be 25 basis points rate hike in June policy.

Rajen Shah, CIO of Angel Broking feels that 5,400 level on the downside looks possible.

"For the current year we are expecting about 1,200 EPS and we are at about 18,200 level. So we are trading at 15 times. It's not a cheap market and in lieu of variety of factors like high inflation which continues to be a concern even the food inflation has again spiked up, crude has touched USD 120 per bbl and plus there are no negative triggers. Good monsoon has already been discounted by the market because that was forecasted about a month back or so. So I think there are absolutely no positive triggers and once the Q1 numbers are out and we see that there is pressure on margins," he explained.

"The market could go down about 14 or maybe 13.5 PE multiple and at that point of time at about 17,200 levels, we could see some buying emerge. I am certainly expecting the markets to weaken in the coming weeks," Shah said.

The 50-share NSE Nifty fell 35.25 points or 0.64%, to close at 5485.80 and the 30-share BSE Sensex lost 116.36 points or 0.63%, to end at 18,268.54.