Nifty Ends Day At 5555 Minus 0.75

The Indian markets traded in a narrow range all day. They lacked momentum from the early minutes of session, and that trend continued till the very end. The political uncertainty that kicked in after Mamta Banerjee’s decision to withdraw support to the ruling UPA kept the markets low. The global situation too was not very encouraging, with worries over China, oil prices and Japanese data.

With these factors in play, the Sensex closed 180.24 points or 0.97% lower at 18315.77 and the Nifty closed 45.80 points or 0.82% lower at 5554.25.

The peer Asian markets were heavily bottomed today, with the major indices all closing over 1% lower. HSBC’s flash reading of the Chinese manufacturing Purchasing Managers’ Index (PMI) came in at 47.8 for Aug 2012. This figure, though slightly higher than that of 47.6 for July, came across negatively as any reading below 50 indicates contraction.

In Japan, after Bank of Japan announced boosting stimulus yesterday, the markets saw an uptrend. These gains were wiped out today because of negative data on Japanese trade that indicated a widened trade deficit on account of lower exports to China and the EU. Negative sentiment thus ruled the markets, with Hang Seng, Nikkei and Shanghai Composite ending lower by 1.2%, 1.57% and 2.07% respectively.

In Europe, a lot of data was shot out today, including PMI for France, Germany and the eurozone. While for Germany and the eurozone the figures for Aug came in better as compared to those for July, France showed a decline. Data on retail sales in UK was released as well. None of these figures have managed to change the direction of the markets, which was earlier decided by a drastic fall in oil prices and in Asian sentiment. The FTSE, DAX and CAC finished the day's trades lower by 0.64%, 0.57% and 0.87% respectively.

Investors are now closely eyeing data from the US. Among the figures to be released that would define the market direction are the Initial Jobless Claims and Philadelphia Fed Manufacturing Index. Investors are also waiting for the speech by Bank of England Governor Mervyn King for cues.

On the domestic front, there was weakness seen uniformly through the structure of the markets. Midcaps and smallcaps too witnessed a decline similar to that of the Sensex, closing lower by 0.65% and 0.53% respectively.

Among the sectoral indices, only 3 of the 13 indices ended the day positive. Technology stocks and FMCG were those that showed a cumulative appreciation in stock prices. Among these, the highest gainers included MphasiS, TCS, Wipro and Godrej Consumer Products. The top losing sectors were Metal, Capital Goods and Power, lower in the range of 1.63%-2.28%. Most of the Metals stocks were down by more than 2%. Among these were Coal India, Hindustan Zinc, JSW Steel, SAIL, Sesa Goa, Sterlite and Tata Steel.

With poor momentum and no direction, we expect the markets to remain lacklustre tomorrow as well. The markets will move in accordance with the cues picked up on the political front. In the mean time, any positive sentiments globally following the Philadelphia Fed PMI or Mervyn King’s speech would play on the markets as well.