Sensex, Nifty end flat; IT gains most, BHEL & ONGC drag

03:55 pm Railways earnings
Railways have earned Rs 24,272.45 crore during April and May this year as against Rs 22,445.29 crore during the same period last year, registering an increase of 8.14 percent.

The total earnings from goods during April-May 2014 were Rs 16,563.57 crore compared to Rs 15,661.15 crore during the corresponding period, registering an increase of 5.76 percent.

The earnings from passengers during April-May period this year were Rs 6693.47 crore compared to Rs 5803 crore during the same period last year, registering an increase of 15.34 percent. The earnings from other coaching amounted to Rs 675.33 crore during April-May 2014 compared to Rs 657.17 crore during the same period last year, registering an increase of 2.76 percent.

03:45 pm Monsoon scare!
Adi Godrej, chairman, Godrej Group and Sanjay Manyal of ICICI Direct say the low monsoon is not likely to have a worrisome impact on the gross domestic product (GDP) or fast moving consumer good (FMCG) sales.

Agriculture contributes about 13.7 percent to India's GDP but the lower-than-expected monsoon forecast will have marginal impact on inflation and the country's growth.

''We are currently in a period of lower inflation as commodity prices are coming off globally. We expect lower inflation than seen 2013-14. Besides, the RBI was working with the lower monsoon expectation,'' says Godrej.

 03:35 pm Market closing
After giving away most of its gains, the market ended in green but on flat note. The Sensex is up 3.48 points at 25583.69 and the Nifty is up 1.80 points at 7656.40. About 1840 shares have advanced, 1269 shares declined, and 87 shares are unchanged.

IT stocks held strong with Wipro, TCS and Infosys gaining 2-3 percent each. Cipla and Dr Reddy's Labs were other gainers in the Sensex. Among the losers were BHEl, ONGC, Tata Steel, Sesa Sterlite and Hero MotoCorp.

03:20 pm Rupee check
The rupee is trading at 59.26 per dollar tracking losses in the domestic share market and falls in other Asian currencies versus the dollar.

Traders will continue to monitor foreign fund flows into the domestic share and debt markets for direction. Foreign investors bought a net USD 826.9 million in debt markets on Friday, the highest single-day flows since Jan. 15.

The pair is likely to see some resistance around 59.40 levels, holding it in a 59.20 to 59.40 range for the day, traders say.

03:10 pm SC order
In what has come as a setback for Jaypee Infratech , the Supreme Court has dismissed the company's appeal against an order passed by the National Green Tribunal (NGT).

Several leading real estate companies including DLF, BPTP, Wave Infratech, Supertech and Jaypee Greens, were issued show causes notices by the NGT for violation of its orders regarding usage of groundwater for construction in Noida and Greater Noida.

02:55pm FII View
Abhay Laijawala, Deutsche Bank says the strong statements of intent on addressing economic revival, simplifying the tax structure, encouraging FDI and making the tax regime non adversarial and conducive to investment, should raise expectations of the government beginning to walk its talk in the forthcoming budget in July.

''We reiterate our strong preference for domestic cyclicals including banks, infrastructure, materials, oil and gas and consumer discretionary. Until the Budget at least, we expect the classical defensives - staples, IT services and pharma to underperform the broad market,'' he adds.

02:45pm Foreign investors not to increase long positions in bond futures
The National Stock Exchange advised foreign investors today to not increase their long positions in bond futures as their overall holding in government debt had reached 92.82 percent of the allowed limit.

The country's biggest stock exchange also said in the circular that foreign institutional investors can invest in bond futures only after their holdings in cash and futures comes below 85 percent of permissible limits.

The total holding limit for foreign investors is USD 30 billion, of which USD 10 billion is allocated to investors like foreign central banks, sovereign wealth funds, insurance funds and pension funds and the other USD 20 billion is open for all overseas investors.

Foreign investors have used up nearly their entire limit under the USD 20 billion category, reports Reuters.

02:40pm Interview
The bankers had a pre-Budget meet with finance minister Arun Jaitley. SS Mundra of Bank of Baroda says the focus was on Budget-related provisions relating to the financial sector. Financial sector representatives comprised of PSUs, private sector banks, insurers, other financial institutions and co-operative banks as well.

From the perspective of PSU banks, the focus was on capital needs, asset quality issues, priority sector lending norms, taxation-related issues, need to accelerate savings and also recovery mechanisms, he adds.

Public sector banks have been asking for capital infusion for some time now. Mundra believes at this point, it makes more sense for the government to make adequate Budgetary allocations and think about divesting its stake in select public sector banks later.

02:30pm LIC to maintain market share
State-owned LIC is expecting to retain its existing market share at 82 percent during the
current fiscal, a top company official said.

"We hope to retain the existing market share in the current financial year at 82 percent," LIC Managing Director SB Mainak said.

LIC's market share increased to 82 percent last fiscal as against the previous year's level of 76 percent, he said. He added that LIC has introduced many new products since
January 2014.

"Products require time to get market acceptance", he told reporters on the sidelines of a seminar organised by BCCI here today, reports PTI.

02:20pm Maruti Suzuki in focus
Brokerage house Bank of America Merrill Lynch (BoAML) says following a decisive election verdict and improved customer sentiment, it raised its passenger vehicle industry forecasts. It believes Maruti Suzuki India (MSIL) is well positioned to ride this aided by new launches.

Therefore, it raised its price target to Rs 2,900 (earlier Rs 2,275), driven by (1) increased volume and sales mix related price assumptions, leading to revised EPS (now 8-20 percent above FY15-16E consensus), and (2) higher early-cycle multiple, in line with past trends.

"MSIL, which is a part of ''Playing eleven'' top research ideas from India, also remains our key pick in the sector," says BoAML in its note.

02:10pm Market Expert
Regan F Homavazir, senior associate VP - Equity Research, Darashaw expects to see a 200-point correction on the Nifty in near term.

However, he sees Sensex heading towards 65,000-75,000 in the long term (4-5 years), but believes 30,000 could be a resistance level.

HDFC, HDFC Bank did not participate in the recent rally. Homavazir believes upmove in HDFC, HDFC Bank may take Nifty higher in the next run.

02:00pm Equity benchmarks continued to trade lower but BSE Smallcap recouped all its losses. The Sensex dropped 127.19 points to 25453.02 and the Nifty fell 37.95 points to 7616.65.

The market breadth turned positive. About 1569 shares have advanced while 1409 shares declined on the BSE. The BSE Midcap Index lost 0.5 percent but Smallcap gained 0.06 percent.

The BSE Realty Index plunged 3 percent followed by PSU, Oil & Gas, Power, Infrastructure, Metal, Bank and Capital Goods with 1-1.7 percent. However, IT and Healthcare indices gained over 1.6 percent.

Shares of Sesa Sterlite, Hero Motocorp, Tata Steel, ONGC, BHEL, DLF and Ambuja Cements dropped 3-4 percent whereas Cipla, Wipro, Infosys, Coal India, Sun Pharma, Tech Mahindra, Cipla and Lupin rallied 1-2.5 percent.

2:00 pm Bond market: The National Stock Exchange advised foreign investors to not increase their long positions in bond futures as their overall holding in government debt had reached 92.82 percent of the allowed limit.

The country's biggest stock exchange also said in the circular that foreign institutional investors can invest in bond futures only after their holdings in cash and futures comes below 85 percent of permissible limits.

The total holding limit for foreign investors is USD 30 billion, of which USD 10 billion is allocated to investors like foreign central banks, sovereign wealth funds, insurance funds and pension funds and the other USD 20 billion is open for all overseas investors.

1:50 pm Delhi power crisis: Newly appointed Union power minister Piyush Goyal blamed the Congress and the Aam Aadmi Party for the long power cuts in Delhi. Addressing the press, Goyal informed NTPC has consented to supply additional gas to Banwana plant to generate 400 MW of additional power leading to restoration of Bawana-Rohini line by end of the day. He also informed GAIL too has been directed by the Union petroleum minister to supply additional gas for Delhi.

1:40 pm Budget expectations: After the pre-Budget meeting with finance minister Arun Jaitley concluded, Uday Kotak, vice-chairman and managing director of Kotak Mahindra Bank said the new mantra now should be a move from 'NREGA to karega'. He feels the government should list LIC, it can be a huge game changer for the Indian financial system.

"Life Insurance Corporation of India (LIC) may be kept at minimum 51 percent government holding, but the government can consider listing LIC and the kind of money the government can raise by listing LIC is significant," Kotak adds. He believes it can fund all the needs of public sector banks as well as the fiscal deficit. He adds this idea need not necessarily be in the July Budget, but over the next few years listing of LIC could be a major game changer for the Indian financial sector. He says the government should also reduce its stake in State Bank of India .

1:30 pm Buzzing: Investors continued to buy shares of midcap IT company MindTree after the company in analyst meet says it expects USD revenue growth in FY15 to remain stronger than last year.

Brokerage house Morgan Stanley, which attended the analyst meet, expects its earnings growth to drive stock price over next 12 months. However, its key risks include rupee appreciation, which could limit any material earnings upgrades.

"After a 19 percent rise from the trough level of May 19 (the Sensex is up 5 percent), its F15e P/E is now 12.5x. Overall, its deal pipeline is up 60 percent Y-o-Y and win rates have improved over the last 12 months," it says in its note.

Citi maintains buy on the stock. "We continue to like MindTree given strong business momentum; expect growth to sustain backed by continued investments in the business and reassuring commentary by management," it says.

1:20 pm Market cap: The combined market capitalisation of India's publicly listed companies crossed USD 1.5 trillion on Monday, as billions of dollars poured into India in the wake of Narendra Modi's stunning election victory last month.

Modi, leading the Hindu nationalist Bhartiya Janata Party, scored the biggest election win for 30 years, pledging sweeping reform to create jobs and boost an economy growing below 5 percent - its slowest in more than a decade.

Strong foreign buying has pushed both the Sensex and the broader Nifty up by just over 20 percent so far this year, posting a series of record highs - the latest on Monday - and far outperforming a 5 percent gain in the MSCI Asia-Pacific index excluding Japan.

Foreign investors have bought a net USD 8.55 billion so far this year, with USD 3.31 billion coming since the beginning of May.

The market recovers slightly but is still in the red with the Nifty trading around 7,620. The Nifty is down 29.70 points at 7624.90 and the Sensex is down 69.62 points at 25510.59. About 1488 shares have advanced, 1407 shares declined, and 69 shares are unchanged.

Wipro, Coal India, Hindalco, Cipla and Sun Pharma are top gainers in the Sensex. Among the losers are BHEL, Tata Steel, Hero MotoCorp, Sesa Sterlite and ONGC.

FMCG companies are in focus as the Met department predicts below normal rainfall this year. India is likely to get 93 percent of average rainfall this year which is lower than April estimate of 95 percent rainfall. But there is some respite, the Met department has also predicted that "El Nino" will be weak or moderate at best this year.

Global cues are pulling both ways as Asian shares trade mixed on back of China inflation data rising to 2.5 percent in may, faster than a 1.8 percent rise in April.  The rupee is trading lower tracking weakness in equities and Asian currencies.

12:55pm Market Update
The market recovered further. The Sensex lost 69.62 points to 25510.59 and the Nifty fell 29.70 points to 7624.90. About 1488 shares have advanced, 1407 shares declined, and 69 shares are unchanged.

Coal India hit record high, up over 2 percent to Rs 423.50.

12:48pm Interview
Mid-cap IT firm Mindtree is seeing strong momentum in its business this year. In an interview with CNBC-TV18, the company's Chief Financial Officer Rostow Ravanan said his clients were feeling confident and were giving bigger orders.

He is confident that his company's first quarter earnings growth will be higher than the industry's growth rate. Ravanan expects margins for this year to be stable, even after accounting for wage hike pressures in the second and third quarters. He is positive in his outlook on high end technology solutions and sees this segment growing more than last year's 4 percent.

12:40pm Nikkei falls to one-week low
Japan's Nikkei share average fell to a one-week low in choppy trade as investors took profits after the weak yen trend paused, while Mitsubishi UFJ Financial Group rose on a brokerage upgrade.

The Nikkei shed 0.9 percent to 14,994.80, the lowest closing since June 2.

The broader Topix dropped 0.5 percent to 1,228.73, while the new JPX-Nikkei Index 400 slipped 0.5 percent to 11,190.69, report Reuters.

12:30pm Sun Pharma up 2%
Shares of Sun Pharmaceutical Industries gained nearly 2 percent as brokerage house Barclays reiterates overweight rating on the stock. It raised target price by 11 percent to Rs 717 apiece.

Barclays says, "We reiterate our overweight rating with a 19 percent upside after analyzing multiple EPS scenarios for FY15E and FY16E, which hinge on Ranbaxy 's FTFs (first-to-file) (Nexium and Diovan)."

According to the report, launch of these FTFs should boost Ranbaxy's cash balance by USD 290 million (translating to Rs 7.2 a share).

The brokerage house remains confident in Sun's current business segments for which it forecasts a 3-year revenue CAGR of 17 percent despite the high base of FY14.

12:20pm FM-Bankers meet
After the pre-Budget meeting with finance minister Arun Jaitley concluded, Uday Kotak, vice-chairman and managing director of Kotak Mahindra Bank said the new mantra now should be a move from 'NREGA to Karega'.

He feels the government should list LIC, it can be a huge game changer for the Indian financial system. "Life Insurance Corporation of India (LIC) may be kept at minimum 51 percent government holding, but the government can consider listing LIC and the kind of money the government can raise by listing LIC is significant," Kotak adds. He believes it can fund all the needs of public sector banks as well as the fiscal deficit.

He adds this idea need not necessarily be in the July Budget, but over the next few years listing of LIC could be a major game changer for the Indian financial sector.

He says the government should also reduce its stake in State Bank of India.

12:10pm FII View
Gautam Chhaochharia, UBS says the brokerage house remains bullish on Indian equities. It believes investors will be willing to give a premium for growth hope and look beyond FY15 earnings estimates, he adds.

''Based on our topdown expectation of 15 percent earnings growth in FY16 and 15x PE, our Nifty target for end-2014 is 8000. There could be upside to the target based on how policy-making evolves,'' says Chhaochharia.

12:00pm Equity benchmarks as well as broader markets trimmed losses in noon trade. The Sensex declined 106.46 points to 25473.75 and the Nifty slipped 37.30 points to 7617.30.

The BSE Midcap and Smallcap indices fell 0.4 percent ecah. About 1346 shares have advanced, 1435 shares declined, and 73 shares are unchanged.

Profit booking continued in oil & gas, capital goods, power, banks and metals stocks while technology and healthcare stocks bucked the trend.

Sesa Sterlite, Tata Steel, BHEL, Tata Power, Hindalco Industries, DLF and Punjab National Bank lost 3-4 percent while Wipro, Cipla, Dr Reddy's Labs, Sun Pharma, Coal India, Tech Mahindra and HCL Technologies gained 2-3 percent.

12:00 pm Business plan: State-run Union Bank of India (UBI) has said it expects the total business to grow by around 12 percent in the current fiscal over the Rs 5.32 lakh crore turnover achieved in FY 2013-14.

The bank's rising bad assets or NPAs (non-performing assets) is a major concern, UBI Chairman and Managing Director Arun Tiwari told, adding that with an improvement in the Indian economy, the NPAs may come down.

UBI's gross NPAs surged to Rs 9,563.72 crore last fiscal from Rs 6,313.83 crore in 2012-13.

11:50 am  Asian market: Japan's Nikkei share average fell to a one-week low in choppy trade as investors took profits after the weak yen trend paused, while Mitsubishi UFJ Financial Group rose on a brokerage upgrade.

The Nikkei shed 0.9 percent to 14,994.80, the lowest closing since June 2.

The broader Topix dropped 0.5 percent to 1,228.73, while the new JPX-Nikkei Index 400 slipped 0.5 percent to 11,190.69.

11:40 am Buzzing: Shares of Sun Pharmaceutical Industries gained as much as 2 percent intraday as brokerage house Barclays reiterates overweight rating on the stock. It raised target price by 11 percent to Rs 717 apiece.

Barclays says, "We reiterate our overweight rating with a 19 percent upside after analyzing multiple EPS scenarios for FY15E and FY16E, which hinge on Ranbaxy's FTFs (first-to-file) (Nexium and Diovan)."

According to the report, launch of these FTFs should boost Ranbaxy's cash balance by USD 290 million (translating to Rs 7.2 a share).

The brokerage house remains confident in Sun's current business segments for which it forecasts a 3-year revenue CAGR of 17 percent despite the high base of FY14.

11:30 am Interview: Mid-cap IT firm Mindtree is seeing strong momentum in its business this year. In an interview with CNBC-TV18, the company's Chief Financial Officer Rostow Ravanan said his clients were feeling confident and were giving bigger orders.

He is confident that his company's first quarter earnings growth will be higher than the industry's growth rate. Ravanan expects margins for this year to be stable, even after accounting for wage hike pressures in the second and third quarters. He is positive in his outlook on high end technology solutions and sees this segment growing more than last year's 4 percent.

11:20 am Market outlook: Regan F Homavazir, senior associate VP - Equity Research, Darashaw expects to see a 200 point correction on the Nifty.

He sees Sensex heading towards 65,000-70,000 in the long term (4-5 years), but believes 30,000 could be a resistance level.

He further says Bank Nifty can see resistance at 17,500. HDFC, HDFC Bank did not participate in the recent rally. Homavazir believes upmove in HDFC, HDFC Bank may take Nifty higher in the next run.

Late monsoon worries is dragging market as the Sensex is down 150.57 points at 25429.64 and the Nifty is down 52.35 points at 7602.25. About 1121 shares have advanced, 1432 shares declined, and 63 shares are unchanged.

Wipro, Cipla, Dr Reddy's Labs, Sun Pharma and Bhari Airtel are top gainers in the Sensex. Among the losers are Sesa Sterlite, BHEL, Hindalco and Tata Steel.

Rupee is lower tracking weakness in shares and mixed Asian currencies. View that RBI may buy dollar is also prompting some traders to book profits on the rupee.

Gilts are steady to flat due to lack of cues. Appetite of gilts is subdued after FII investment limit reached.

Commodities saw Nymex crude jump above USD 104/bbl to touch the highest level since March and Brent is above USD 110/bbl. Gold prices rise marginally trading above 1250 per ounce.

Asian markets are mixed with some of them lower on account of profit booking. Marginal rise in the yen also weighs on the Japanese equities.

10:58am Monsoon update
India is going to have a far worse monsoon season than expected. That's the word coming in from the Indian Meteorological Department (IMD), which says rainfall in June-September is likely to be below normal at 93 percent of the long period average. In terms of quantity, this could be the lowest in four years.

In April, the IMD had predicted a below normal monsoon at 95 percent.

Even though the southwest monsoon has arrived in Kerala, it is expected to weaken, while the El Nino effect is expected to further intensify in the coming days, said the IMD on Monday.

''Northwest India is likely to be worst hit with as low as 85 percent of its normal quota of rainfall, while Northeast India may get 99 percent, central India 94 percent, and the southern peninsula 93 per cent,'' DS Pai, director of long range forecast at The India Met Department told CNBC-TV18.

10:50am May Auto sales data
Society Of Indian Automobile Manufacturers (SIAM) says passenger vehicle sales rose 2.8 percent year-on-year to 2.07 lakh units in May. An increase in passenger vehicle sales data was for the first time in nearly 15 months.

Two-wheeler sales jumped 16.3 percent to 14 lakh units but commercial vehicle sales fell 15.3 percent at 46,986 units during the same period.

Total vehicle exports increased 32.2 percent to 2.96 lakh units in May.

10:40am Sun Pharma in focus
"We reiterate our overweight rating on Sun Pharma with a 19 percent upside after analyzing multiple EPS scenarios for FY15E and FY16E, which hinge on Ranbaxy's FTFs (Nexium and Diovan). Further, we remain confident in Sun's current business segments for which we forecast a 3-year revenue CAGR of 17% despite the high base of FY14," says Barclays in its note.

"We also include Gx Gleevec in our FY16 and FY17 estimates (NPV of Rs 2.40/share). So far in 2014, Sun has underperformed the BSE Sensex by 14 percent despite its strong results (Q3 and Q4 beat consensus). This underperformance, in our view, ignores Sun's strong fundamentals and synergies from the Ranbaxy integration, presenting even better entry point for investors. We raise our price target by 11 percent to Rs 717," it adds.

10:30am Sharon Bio Medicine
Shares of Sharon Bio Medicine gained 5 percent ahead of board meeting for issue of shares to promoters.

"A meeting of the board of directors of the company is scheduled to be held on June 10, 2014, to consider issue of warrants /shares to promoter group on preferential basis," says the company in its filing.

10:20am Bharti Airtel up 1%
Investors are excited about the telecom stock as CLSA sees it as a long-term winner and reiterates high-conviction buy rating. The brokerage will also increase its target price to Rs 415 from Rs 390 if tower sale deal goes through in Africa.

Bharti Africa is still loss making and CLSA says tower sharing will be a more economical way of network expansion and will simultaneously also reduce debt. Bharti is looking to rake up around USD 2.3 billion by selling its Africa tower assets, which may help to cut debt by around Rs 65,000 crore.

10:10am Market Expert
Even as concerns over weak monsoon are rising, the market can still hold ground, feels Anup Bagchi of ICICI Securities. In an interview with CNBC-TV18, Bagchi says retail investors are slowly making their way back to the market.

"One can say confidently that retail is coming back," he says, pointing to data showing retail net inflows in the last 10 days.

Bagchi's advise to investors already holding shares is that if their price targets have been met, they should book profits. He sees 6800 on the Nifty as a good level to get back into the market.

10:00am Benchmark as well as broader indices continued to see profit booking after steep rally in previous sessions. The Sensex fell 137.59 points to 25442.62 and the Nifty lost 48.15 points to 7606.45.

The BSE Midcap and Smallcap indices declined over 1.2 percent. Declining shares outnumbered advancing ones by a ratio of 1279 to 872 on the BSE.

Sesa Sterlite, Tata Power, Hindalco, BHEL, Tata Steel, DLF, Hindalco Industries and Ambuja Cements topped the selling list, falling 2-4 percent.

However, Wipro, Cipla, Sun Pharma, Dr Reddy's Labs, Infosys, Tech Mahindra and Lupin outperformed, gaining 1.5-2.5 percent.

10:00 am Less rains! The monsoon is expected to bring below-average rainfall this year, potentially lowering grain yields, pushing up food prices and hurting the economy.

Indian Meteorological Department (IMD) says rainfall in June-September is likely to be below normal at 93 percent of the long period average. In terms of quantity, this could be the lowest in four years.

In April, the IMD had predicted a below normal monsoon at 95 percent.

Even though the southwest monsoon has arrived in Kerala, it is expected to weaken, while the El Nino effect is expected to further intensify in the coming days, said the IMD on Monday.

''Northwest India is likely to be worst hit with as low as 85 per cent of its normal quota of rainfall, while Northeast India may get 99 per cent, central India 94 per cent, and the southern peninsula 93 per cent,'' DS Pai, director of long range forecast at The India Met Department told CNBC-TV18.

On the other hand, he said, Gujarat and Maharashtra may see better rainfall than northwest India. He said the monsoon has stalled in west coast on low pressure in Arabian Sea. He expects monsoon to reach Mumbai in 3-4 days.

9:50 am Market check: The market sees sharp fall dragged by profit booking and monsoon woes. The Sensex is down 198.38 points at 25381.83 and the Nifty is down 63.25 points at 7591.35.  About 825 shares have advanced, 1216 shares declined, and 43 shares are unchanged.

Metals, banks, autos and realty stocks have lost majorly among all the laggards. Tata Power, Hindalco, Sesa Sterlite, GAIl and BHEL are major losers in the Sensex. Among the gainers are Sun Pharma, Wipro, Infosys, TCS and Dr Reddy's Labs.

9:40 am Buzzing: CLSA sees Bharti Airtel as a long-term winner and reiterates high-conviction buy rating. The brokerage will also increase its target price to Rs 415 from Rs 390 if tower sale deal goes through in Africa.

Bharti Africa is still loss making and CLSA says tower sharing will be a more economical way of network expansion and will simultaneously also reduce debt. Bharti is looking to rake up around USD 2.3bn by selling its Africa tower assets, which may help to cut debt by around Rs 65,000 crore. According to a CNBC-TV18 exclusive, instead of selling it in one go, the company has spilt the sale of its nearly 15,000 towers among four buyers so that the company can get maximum value for the deal.

CLSA is also convinced about Bharti's subscriber growth as it is leading in India mobile subscriber addition and gaining share across all market and circle categories.

9:30 am FII view: Gautam Chhaochharia, UBS says the brokerage house remains bullish on Indian equities. It believes investors will be willing to give a premium for growth hope and look beyond FY15 earnings estimates, he adds.

''Based on our topdown expectation of 15 percent earnings growth in FY16 and 15x PE, our Nifty target for end-2014 is 8000. There could be upside to the target based on how policy-making evolves,'' says Chhaochharia.

Soon after starting on a strong note, the market slipped into red. The Sensex is down 6.41 points at 25573.80 and the Nifty is down 3.00 points at 7651.60. About 822 shares have advanced, 191 shares declined, and 32 shares are unchanged.

Bharti, Maruti, Tata Motors, Wipro and Infosys are top gainers in the Sensex. Among the losers are ONGC, HDFC, Hero Motocorp, Axis Bank and HUL.

The Indian rupee opened flat at 59.24 per dollar against 59.20 Monday. The dollar strengthened pulling the euro dollar below 1.36.

Ashutosh Raina of HDFC Bank said that, ''The recent global cues have improved the market sentiment with all asset classes performing. Indian markets have also been a part of this euphoria with huge FII and FDI inflows.''

''The gains in the USD / INR pair have however been capped by aggressive intervention by the RBI. Expect the 58.50-59.50/dollar range to continue for some more time,'' he added.

US markets ended higher with the Dow and S&P 500 closing at a fresh record high. Asia is firm in trade, all eyes now on China's inflation data for May due to be released today.

In commodities, Brent crude managed to cross the USD 110/barrel mark on optimism about growth in US and China. From precious metals space, gold consolidated around the USD 1250 per ounce mark.