Market Breadth Weak, Europe Opening Eyed

The Indian markets opened lower today and continue to trade in a tight range. The Sensex has been trading in a range of 70 points on either side from its previous close of 18645. The markets are suffering an overhang of global as well as domestic factors, which include the fiscal cliff worries in the US and miserable IIP and inflation numbers back at home. All this has seen the markets trade in a rather lacklustre fashion until now and which is expected to remain so through the rest of the day too. Currently, the Sensex is trading down 181.54 points at 18437.07 (down by 0.98%) and the Nifty by 56.80 points at 5610.15 (down by 1%).

Other Asian markets too have continued to trade in a fashion very similar to how they had begun the day. The Hang Seng and the Shanghai Composite are trading lower by 1.42% and 1.09% respectively.  A stronger yen and speculation that the upcoming elections could turn out to be beneficial for the Japanese economy if the opposition leader, who is aggressive on the fiscal and monetary policy fronts comes to power, have led to the Nikkei gaining 1.91%. Investors are also eyeing the European markets since various data releases would give a clear picture on the health of the European economy.

On the domestic front, mid and small caps have been doing well as compared to the broader indices. The BSE Midcap and Smallcap indices are currently trading lower by 0.50% and 0.36% respectively. The overall breadth too is negative with 882 (33.65%) advances and 1646 declines (62.80%). Of the 13 sectoral indices, only one, the Consumer Durables Index which is higher by 0.71% is trading in the black. This gain is being led by TTK Prestige, Videocon Industries and Titan Industries which are up by 2.74%, 1.12% and 1.03% respectively.

Notably, among gainers are telecom stocks which have been trading higher after the end of the 2G auctions. Bharti Airtel and Idea Cellular are currently trading higher by 3.13% and 4.07% respectively. Others gainers include Wockhardt, which is trading higher by 3.82% on the back of a robust result announcement. On the other hand, GMR Infra remains weak after posting poor financials. It is trading lower by 5.65%.

We expect the markets to remain low throughout the day. The range may be broken on either side on account of the European opening. However, due to the overall negative sentiment, trading is likely to remain bearish.