Markets Close Flat Ahead Of Expiry

The Indian markets closed flat today in view of the expiry of the September derivative series. The Sensex closed 0.33% down and Nifty closed lower by 5663.

The Asian markets reacted to the criticism on QE3 and closed negative. The markets in Tokyo were down by over 2%, as many stocks turned ex-dividend. Shanghai too lost over 1% and Hang Seng was down 0.8%.

In Europe, the borrowing costs of Spain surged after the Catalonia region asked for snap elections. The yields on the 10-year Spanish benchmark government bonds rose by 22 basis points to 5.93%. The future of Catalonia is driving the European region, as this is a economically important region in Spain and snap elections could give it independence.

Amid this uncertainty, the European indices are trading in the red. CAC is showing negative returns of 2%, and FTSE and DAX are both lower by over 1%. Since morning, the losses have been widening in the European markets over the issues in Greece and Spain. In line with the same, Dow Jones Futures is currently trading 6 points lower at 13399.

Meanwhile, Business Standard has reported that the RBI may hold the rates in its October policy review. Inflation in the country has not shown signs of cooling off to the RBI’s threshold levels, and hence, the central banker may decide to hold the rates as it has done thrice previously in the current fiscal year.

In the equity markets, all the sectors remained under pressure. The Realty index, which was in good gains in the morning, came down by closing. The FMCG index was also in gains of over 1%, but it trimmed its gains later and closed with 0.5% intraday profits. Metals remained under pressure again, losing over 1%. Tech, PSU and Capital Goods also lost over 0.5% each.

Among the Sensex stocks, Cipla outperformed the broader market and closed with 2.66% gains. Two-wheeler manufacturer Hero MotoCorp gained 1.6%, while SBI and ITC added 1% each to their market cap. On the losing side, Bharti Airtel slipped in today’s trades too by nearly 4%. Metals and Mining stocks including Coal India, Hindalco, Sterlite, Jindal Steel and Tata Steel were in pressure and closed the day in losses. Capital Goods majors L&T and BHEL also ended negative. The government’s SEB debt restructuring seemed to have no impact on the power stocks, as Tata Power closed down while NTPC managed to make minor gains.

In individual stocks, Voltas gained 6% ahead of the festive season. Pharma firm IPCA surged by 5%. Cement stocks like ACC, UltraTech, Shree Cement and Ambuja also managed to end the day in the green. A few infra stocks such as HDIL and IRB Infra were also up today. Healthcare counters Apollo and Fortis also managed to see some gains.

Kingfisher Airlines closed the day with 9% gains as the promoters said that they are in talks with the foreign airlines for a partnership in the company.

The market breadth remained mixed for the whole day, with a ratio of 1:1 showing equal advances and declines.

The markets would continue to remain volatile in the backdrop of the September series expiry. The market has strongly resisted going down despite the global markets showing a decline of about 2%-3%. The underlying assumption is that there is still some positivity in the market, which may come into effect after the series expiry. However, investors should note that there will be a short-term impact, and the markets will try to catch up with the fundamentals if the sentiment takes a beating.