Indices Stay Lower As Investors Book Profits

The Indian markets are still trading lower, with Sensex and Nifty down by almost 1% each. The Sensex has dipped below the 19k mark and Nifty is trading at sub-5725 levels. The markets participants had expected the broader indices to go higher by almost 1% in their early trades after the government continued its reforms momentum yesterday. However, that appears to be some kind of profit booking on the streets, as the markets seemed to be in overbought positions since the past trading sessions.

The participants on D-Street saw some chaos in the early morning after trading on the National Stock Exchange (NSE) halted due to some technical glitches. However, this was sorted out and trading resumed in approximately 15-20 minutes. According to Bloomberg’s reports, 59 erroneous orders were responsible for a plunge and halt in trading today that briefly erased about US$ 58 billion in value from Asia’s fourth-largest market. The report further said that the orders entered by Emkay Global Financial Services for a client that led to trades valued at Rs 6.5 billion (US$ 126 million) caused the problem.

Among the sectoral indices, IT and Teck are trading lower, both down almost 1.6%. Other indices like Bankex, Realty and Healthcare are also trading in the negative territory. Three indices, viz. Consumer Durables, Auto and FMCG are trading higher by 0.79%, 0.42% and 0.35% respectively.

The other Asian markets are trading higher, with Hang Seng and Nikkei up 0.42% and 0.44% respectively. This is after media reports which hinted that investors pushed up commodity-related firms, while Japanese shares wobbled after the Bank of Japan stopped short of announcing fresh monetary easing. The Shanghai market continues to remain closed on account of a public holiday.

European indices have opened their initial trades in the positive territory, with the FTSE, CAC and DAX gaining in the range of 0.3%-0.5% respectively. Bloomberg reported that the participants are positive in anticipation of a report that may show a rise in US payrolls last month. The US index futures were little changed.

Back home, HDFC is the leading index loser, trading 4% down at Rs 756.70 per share. IT stocks like Infosys, Wipro and TCS are also trading lower in the range of 1.2%-2.2% after media reports which said that the Sept 2012 quarter results due next week may get impacted by the rupee's appreciation. ICICI Bank is also trading lower by 1.27% at Rs 1069.90 per share as investors are booking profits in the counter. Other stocks like RIL, Sterlite Industries, Cipla, SBI, NTPC, HDFC Bank and BHEL are also in the red.

On the other hand, FMCG heavyweights HUL and ITC are trading in the green zone, up 1.75% and 0.22% respectively. Auto stocks like Tata Motors, M&M and Maruti Suzuki are trading higher. Other stocks like Coal India, L&T, Jindal Steel and GAIL India are also up.

The market breadth, which indicates the overall health of the market, is weak as of now. On the BSE, 1876 shares have declined, 773 shares advanced and 100 shares are unchanged.

We expect the markets to remain volatile with a negative bias for the latter part of the day.