Trades Remain Range-Bound

The Indian markets have been pivoting between flat and negative today, trading in a range-bound manner. Investors' mood has been rather subdued after the downgrade by IMF and S&P’s warning of a credit rating downgrade. Moreover, there seems to be a downbeat sentiment with regards to the earnings, keeping the markets low. At the moment, the Sensex is seen by 6.97 points or 0.04% at 18624.13 and Nifty is lower by 0.35 points or 0.01% at 5651.80.

The global markets too have been lacklustre. The Asian markets have been lower in the range of 0.02%-0.85%. The negative sentiment has been taking over markets worldwide due to growing concerns over the European debt crisis. So far, there was a positive reaction in the markets due to action on the monetary policy front. However, S&P cutting Spain’s credit rating by 2 notches, to just one level above the speculative (or junk) grade highlights the deteriorating situation. There have been concern over the stance taken by Spain of not needing action by the ECB.

Pessimism also revolves around the quarterly earnings in the US and now in Asia. This selling pressure has also seeped into Europe. While the FTSE opened flat, DAX and CAC opened lower by 0.2% and 0.4% respectively.

Domestically, the Sensex is trading flat but there is stronger buying in the midcaps and smallcaps, which rose by 0.46% and 0.26% respectively.

8 of the sectoral indices are trading positive, with Realty being the highest gainer, up by 2.67%. The index was pushed up by DLF, which has gone up 2.18%, and further still by Unitech, higher by 14.47%. Unitech has been seen tremendous intraday gains as it reached a settlement on its joint venture with Telenor, wherein it has agreed to dispose its shareholding in Uninor. The details of this settlement have not been provided due to confidentiality obligations. Other sectoral indices, though, have not seen any significant gains.

Auto has been the biggest loser today, currently lower by 0.67%. This has followed the industry body SIAM's revised FY13 growth forecast, down to 1%-3% from 9-11% for passenger cars and down to 5%-7% from 11-13% for motorcycles. With this, Maruti Suzuki India and Mahindra & Mahindra are trading lower by 0.96% and 1% respectively. Among two-wheeler players, Bajaj Auto and Hero Motors have lost 0.35% and 0.22% respectively.

We expect the markets to remain flat throughout the day due to a lack of positive global cues and domestic pessimism.