Indices End Flat, Europe Jittery Over Monti Comments

The directionless trading on the Indian bourses today ended on a flat note. Nifty has been meeting stiff resistance near the 6000 mark, ending the day higher by 1.50 points or 0.03% at 5908.90. The Sensex, though, ended the day lower by 14.41 points or 0.07% at 19409.69. Throughout the day, the broader indices traded flat to negative, while midcaps and smallcaps traded significantly higher. The market breadth was positive, with 1536 (50.26%) advances and 1406 (46.01%) declines.

Globally, positive sentiments were seen throughout the day due to positive employment data from the US, improved manufacturing and industrial data from China and 100% bond buyback in Greece. This spurred a higher trading session in the Asian markets. The day ended with gains on the Hang Seng, Nikkei and Shanghai Composite, which were up by 0.39%, 0.07% and 1.08% respectively.

However, the European markets reacted negatively to comments by the Italian Prime Minister Mario Monti. Over the weekend, Monti said he was ready to step down from his position as soon as the Parliament passes a pending budget law. This happened after former Prime Minister Silvio Berlusconi’s PDL party withdrew support for Monti’s government last week. The development has added to the concerns of the Euro zone. Responding to this, the FTSE, DAX and CAC opened negative today and are trading lower by 0.36%, 0.64% and 0.79% respectively.

Domestically, midcaps and smallcaps saw strength although the broader indices were choppy. The BSE midcap and smallcap indices ended the day higher by 0.65% and 0.34% respectively. 6 of the 13 sectoral indices ended the day positive. The highest gains were seen in Realty, Healthcare and Bankex, which moved up by 1.10%, 0.89% and 0.31% respectively. The BSE IT, Teck and Consumer Durables took the greatest losses, of 0.07% 0.89%, 0.90% and 1.52% respectively.

HDFC, Dr Reddy's Labs and Cipla were the top gainers, ending the day higher by 3.15%, 2.51% and 1.73% respectively. TCS, NTPC and Bharti Airtel were the strongest losers, lower by 2.50%, 1.91% and 1.46% respectively.

Sesa Goa touched an intraday low of 3.85% at Rs 188.10 per share. This after a panel appointed by India's top court recommended scrapping 42 iron ore mining leases in Goa until mining companies submit plans to deal with the environmental impact and the legal details involved, a lawyer who attended the hearings said. The stock, however, still managed to close up by 0.11% at Rs 188.30.

Claris Lifesciences ended the day lower by 9.17% today at Rs 240.30 per share on media reports that the company was transferring its infusions business, which accounted for more than 50% of its revenues, to a joint venture with Otsuka Pharmaceutical Factory and Mitsui & Co for a consideration of Rs 1500 crore.

We expect the markets to be directionally triggered by developments on the US fiscal cliff by the likelihood of more bills being passed on the domestic reforms front.