Sensex, Nifty end flat; charts say mkt in overbought state

Indian shares recovered from the day's low to provisionally end flat on Monday led by a rally in public sector banks on hopes that legislation on banking sector reforms would be passed during the current session of parliament. The consequent changes would lead to the issue of new banking licenses.

The Sensex closed down 14.41 points or 0.07 percent at 19409.69, while the Nifty up 1.50 points or 0.03 percent at 5908.90.

The rally in banks was led by heavyweight HDFC (up 3.15%) followed by Punjab National Bank (2.35 percent), Bank of India (4.3 percent) and Bank of Baroda (up 4.11 percent).

Shares of SBI's associate banks were on a roll today with two of them hitting new 52-week highs. All the three associate banks witnessed huge trading volume in the light of expected amendments to banking regulations today. However, the shares of the parent bank itself remained subdued making only marginal gain minutes before the markets was to close today.

On the losing side, Cairn India shares ended trade down 1.98 percent after Goldman Sachs downgraded the stock to 'neutral' from 'buy', citing expectations of flat to declining earnings growth.

Shares in Uttar Pradesh-based sugar companies were under a bit of pressure today after the state raised the price at which sugar mills buy the new season crop by up to 16 percent to Rs 290 per 100 kg. Morgan Stanley said in a note the hike in the price of cane in the current sugar season by Rs 2,920 per tonne is much higher than expectations of a 2,820 rupees pertonne hike.

The biggest loser was Balrampur Chini (down 9.25 percent) followed by Bajaj Hindusthan (down 1.25 percent) and Shree Renuka Sugars (down 2.2 percent).

Earlier, technical indicators had suggested the market is in an over-bought state. Indications were that the market is likely to fall on any negative development on the insurance and pension bills, which the government is expected to push through during the current session of parliament.

Today, about 1494 shares have advanced, 1371 shares declined, and 604 shares are unchanged.

Indian equity benchmarks fell marginally amid choppy trade, following a decline in European markets. France's CAC was down 0.7 percent and Germany's DAX slipped 0.5 percent while Britain's FTSE went down 0.2 percent.

The 30-share BSE Sensex fell 46 points to 19,377.98 and the 50-share NSE Nifty lost 16 points to 5,891.25.

Country's largest software services exporter TCS dropped 2 percent and top telecom operator Bharti Airtel slipped percent.

Private oil & gas producer Reliance Industries and utility vehicle major Mahindra & Mahindra were down 1.25 percent each.

Private sector lender ICICI Bank was down 0.8 percent while its rivals State Bank of India and HDFC Bank were flat.

Engineering conglomerate Larsen & Toubro, commercial vehicle major Tata Motors and top car maker Maruti Suzuki fell 0.6-1 percent.

Meanwhile, housing finance company HDFC rallied over 2 percent and FMCG major Hindustan Unilever rose 0.6 percent.

Drug producers Cipla and Dr Reddy's Labs gained over 1 percent. Two-wheeler majors Hero Motocorp and Bajaj Auto were up 0.8-01 percent.

In the second line shares, Sadbhav Engineering surged nearly 5 percent as the company has received Rs 210 crore from Bharat Coking Coal.

Equity benchmarks have remained rangebound after two  hours into the trade. At 10.45 am, the 30-share Sensex was trading up 18.77 points or 0.10% at 19442.87, and the Nifty crawled up 4.20 points or 0.07% at 5911.60.  Market expert Sudarshan Sukhani expects markets to remain choppy, even go down to 5900 in the near term.

Wipro remains an outperformer, gaining 1.45% on the Sensex. Its recent acquisition of a skin care company in Singapore gave a sentiment boost to the stock.

Private oil & gas producer Cairn India slipped 1.5 percent as the foreign research firm Goldman Sachs has downgradded the stock to neutral with a target of Rs 380. "With a medium-term oil price outlook of gradual moderation from here on, earnings profile is seen as flat to declining versus previous expectation of growth," the firm reasoned.

Housing finance company HDFC and private sector lender HDFC Bank were up 2 percent and 0.5 percent, respectively.

State-owned power equipment maker BHEL, FMCG major Hindustan Unilever and commercial vehicle maker Tata Motors gained 0.7 percent each.

Infosys, country's second largest software services exporter rose 0.5 percent whereas its rival TCS dropped over 1 percent.

Drug producer Cipla rallied 1.65 percent. Cigarette major ITC declined 1 percent.

Sterlite Industries lost another 2 percent following a fall of 2 percent on Friday.

Shares of Hindalco and JSPL were down over 0.8 percent. Telecom operator Bharti Airtel went down 0.85 percent.

Iron ore producer Sesa Goa tumbled 2.5 percent after the Supreme Court
refused order on the company's plea on Karnataka mine lease renewal.

In the second line shares, Federal Bank, Karnataka Bank, IRB Infra, Cox & Kings and Blue Star gained 2.5-6 percent whereas Balrampur Chini, Pantaloon Retail, Shoppers Stop, Responsive Industries and Shree Renuka fell 3-5 percent.

A sluggish start to the week, with benchmark indices slightly down after opening with small gains. As has been the trend over the last couple of weeks, buyers continued to show preference for midcap and small cap shares.

The Sensex is down 9 points at 19,414, and the Nifty is down 6 points at 5901. Nifty December futures continue to trade at a healthy premium-33 points this morning-indicating that traders are expecting a broad rally after the current consolidation phase.

Wipro shares are up 2% to Rs 387 after the company bagged a USD 200 million technology service contract in Europe.

Other key gainers in early trade include Gitanjali Gems, Strides Arcolab, Reliance Communications and Bajaj Holdings, up around 2% each.

Among laggards, Sesa Goa shares were down around 3% to Rs 183, after the Supreme Court on Friday recommended that 42 mining leases in Goa be scrapped. This will be a major blow to the company, which earns a substantial chunk of its revenues from Goa mining operations.

NMDC shares were down close to 4% to Rs 153 as the market expects the company's divestment issue will be priced at a discount to market price. A panel of ministers will finalise the issue price later today.