Markets Close Flat; Trend To Persist

The markets remained range-bound in the first half of the trading session, saw a little decline in the second half and eventually closed within the range today, having moved up by 40.73 points or 0.24% to close at 16918.08. Nifty closed at 5128.20, marking a rise of 10.25 points or 0.20%.

In the Asian markets, the trends remained the same for Hang Seng, which closed 0.79% down. Nikkei too closed negative, lower by 0.24% on the back of weak commodity trading and a strong Yen hitting exports. Shanghai Composite rose today on the release of flash PMI figures by Markit Economics. Though the figures indicated a contraction in manufacturing and continuing weakness in demand and employment, they also suggested the highest PMI in 5 months. The Chinese index rose by 0.24%, and also helped moderate losses in other Asian markets.

European markets have dipped lower in line with yesterday’s declines, with the FTSE, DAX and CAC currently trading in losses of 1.73%, 1.74% and 2.09% respectively. As we mentioned in our earlier updates, the Spanish and Italian governments banning short selling securities for 3 months only provides short-term support, and the fundamentals continue to overpower this effect.

On the domestic front, even the rupee saw no signs of gaining strength and ended on the wrong side of the 56 level, at 56.08/dollar.

Of the sectors, 9 of the 13 indices ended in the positive. IT has been trading lower due to the moderate growth outlook of the sector and on Wipro’s disappointing results for Q1 FY13, which saw the stock decline by 2.93%. The FMCG index too gained 1.91% following HUL's robust results, which had the stock price gain 7.5% today. Not surprisingly, due to the petrol price hike, while Oil & Gas gained momentum, Auto witnessed consistent selling.

LIC Housing announced its Q1 FY13 results, which disappointed investors. The net profit was seen lower by 11%, while the Net Interest Income reduced marginally by Rs 11 crore to Rs 350 crore. The NPA ratio for the lender remained flat at 0.38%.

Similar to the trends we have seen in Mid-Cap IT stocks, eClerx registered a 62% growth in net profit to touch Rs 49.3 crore for the elapsed quarter. The topline of the company too saw strong figures, with sequential revenue growth of 20.45% reaching Rs 153.7 crore. Based on these figures, the stock price rose strongly by 11.37% today.

Overall, the weakness in Europe continues to be reflected in the market movements, which will maintain the downward pressure in stocks worldwide. On the Indian front, currency worries are expected to remain due to the continuing policy inaction. This would result in a cumulatively unfavourable situation for the Indian markets.