Market Breadth Positive But Sensex Lower By 0.1%

The Indian markets opened on a higher note. This was due to the positive sentiment in the Asian markets and to a 5% increase in FIIs’ cap on debt investments. However, following a 4.5% rise last week and due to the uncertain sentiment created due to the scheduled parliamentary voting on retail FDI, trades turned jittery. The markets, which had turned towards the red, are now slowly inching towards being flat. Currently, the Sensex is trading lower by 16.74 points or 0.09% at 19323.16 and Nifty is trading lower by 5.60 points or 0.10% at 5874.25.

The market breadth, however, is positive with 1509 (54.95%) advances and 1111 (40.46%) declines. This is because of the significant inherent strength in the markets. Although the broader indices are trading lower by roughly 0.1%, the BSE midcap and BSE smallcap are higher by 1.18% and 0.99% respectively. Of the 13 sectoral indices, 5 are in the negatives. Realty, Metals and Capital Goods are the highest gainers, up by 1.51%, 1% and 0.65% respectively.

There has been increase volatility in the automobile sector as companies released their monthly sales figures for Nov 2012. It has resulted in an upward move in the stock prices of Mahindra & Mahindra (M&M), Maruti Suzuki and Bajaj Auto. At the same time, the stock prices of Hero Motors, TVS Motor and Tata Motors are lower due to subdued sales. Overall, the Auto index is trading higher by 0.57%. M&M saw a larger upward move relative to others, supported by developments on its strategic deal with Aston Martin, as it got an endorsement from Unite – UK’s biggest labour union.

GMR Infra is trading higher by over 4% as the company obtained a stay in the Singapore Court allowing it to continue operations in the Maldives. UltraTech Cement is trading higher by 2.33% due to developments in the company’s talks to buy Jaypee Cement’s Ahmedabad facility.

Although there is inherent strength in the markets, the Sensex is being pushed lower by downward movement in counters like Bharti Airtel, HDFC Bank and ITC, which are trading lower by 1.22%, 1.94% and 0.75% respectively.

We expect that the markets will not see a heavy downward movement due to the overall strength prevailing.