Sensex, Nifty nosedive to end down; operators flee banks

Key equity benchmarks close slightly down, but way off the intra-day highs which saw the Sensex touching levels last seen 20 months and 23 months ago, respectively.

Widening of trade deficit in November accelerated the slide noon onwards, and operators dumped their long positions in banking stocks after the Lok Sabha was adjourned for the day.

The Sensex ended the day at 19387.14, down 22.55 points after hitting a high of 19,612.18, and the Nifty fell from the day's high of 5,965.15 to close at 5898.80, down 10.10 points over its previous close.

Lot of speculative positions had been built up in banking shares yesterday on hopes that the Banking Laws Amendment Bill would be passed today. Brokers said traders unwound their positions in a hurry, not wanting to carry them forward because of uncertainty if the Bill would be passed at all.

Among key losers, State Bank of Travancore, Vijaya Bank, State Bank of Mysore, Oriental Bank of Commerce, Dhanlaxmi Bank, Karnataka Bank and South Indian Bank were down 4-6%. These stocks had risen sharply on Monday as the Banking Bill was being debated.

In sectorwise performance, FMCG shares did well, while shares in the power and realty sectors took a beating

Among frontline gainers, HDFC, Bajaj Auto, Hindustan Unilever and Sun Pharma rose between 1-2%.

Adding to the bearish mood today was data showing India's trade deficit-exports minus imports-at USD 19.5 for November, despite a slowdown in gold imports and a slight moderation in oil imports.

Exports declined 4.2 percent year-on-year in November, compared to 1.6 percent decline last month, the seventh straight month of decline.

The Sensex has rallied over 1000 points in less than a month, and indices are up 25% for the calendar so far, as investors are anticipating a turnaround in the economy and corporate earnings. And while macro-indicators are not showing any encouraging signs, strong foreign liquidity has been pushing share prices higher.

Indian equity benchmarks turned lower in afternoon trade after erasing morning gains of more than 200 points on the Sensex, weighed down by banks, technology, metals, oil & gas and power stocks.

The 30-share BSE Sensex lost 69.33 points to 19,340.36 while the 50-share NSE Nifty fell 26.40 points to 5,882.50. Meanwhile, the broader markets dropped more than benchmarks with the BSE Midcap and Smallcap losing over 1 percent.
 
In the second line shares, Puravankara Projects, Strides Arcolab, Indiabulls Real, State Bank of Tranvancore and Jyothy Labs were down 5-8 percent.

Among smallcaps, Sterling Holiday, TV18 Broadcast, Geodesic, Mastek and Bilcare dropped 5-6 percent.

However, Bartronics India gained as much as 19 percent to touch an intraday high of Rs 27.45 after its subsidiary bought 51 percent stake in the US based Systems America.

Banks stocks saw profit booking today with the BSE Bankex falling 0.4 percent. Country's largest lenders State Bank of India, ICICI Bank and HDFC Bank were down 0.3-0.9 percent.

State-owned power equipment maker BHEL and aluminium major Hindalco Industries plunged more than 3 percent.

Top software services exporter TCS went down 1.5 percent while its rival Infosys and Wipro declined 0.5 percent and 1.3 percent, respectively.

Oil & gas producers Reliance Industries and ONGC slipped 1 percent. Commercial vehicle major Tata Motors and telecom operator Bharti Airtel were down 1 percent too.

Meanwhile, FMCG major Hindustan Unilever, two-wheeler company Bajaj Auto and steel producer Jindal Steel gained 2 percent each.

Housing finance company HDFC was up 1 percent and cigarette major ITC gained 0.65 percent.

The BSE benchmark Sensex trimmed its initial sharp gains but managed to trade higher by 111 points in the late morning trade on buying mainly in Pharma, FMCG, and Banking sectors on the back persistent foreign capital inflows. At 12.16 pm, the Sensex was trading up 111.71 points or 0.58% at 19521.40, and the 50-share Nifty was up 27.85 points or 0.47% at 5936.75.

Hopes of a rate cut by the Reserve Bank of India  (RBI) in its monetary policy review next week boosted market sentiment. Foreign institutional investors (FIIs) bought shares worth a net Rs 698.23 crore on Monday as per provisional data from the stock exchanges.

An hour ago, Nifty had touched a 23-month high when it crossed previous high of 5950 made on December 7. The Sensex gainers include HUL (2.54%), Bajaj Auto (2.29%), Sun Pharma (2.48%), HDFC (1.59%) and Jindal Steel (1.43%). FMCG major ITC gave up some gains garnered in the morning but is trading at Rs 304.30 up 0.98% from its previous close of Rs 301.35.

Asian stocks showed a mixed trend in the early trade amid signs of progress in talks over the US fiscal cliff of billions of dollars in upcoming tax hikes and spending cuts in the world's biggest economy. Key benchmark indices in Hong Kong, Singapore and South Korea rose by between 0.18 per cent to 0.46 per cent while indices in China, Japan, and Taiwan shed by between 0.23 per cent to 0.41 per cent.

Key equity benchmarks Sensex and Nifty leapt rallied in early trade Tuesday, with brokers attributing the surge as sentiment-driven more than anything else. The Sensex climbed to a 20-month high and the Nifty to a 23-month high.

Brokers said the market is betting that the Banking Laws Amendment Bill, a key policy reform, will be passed in Parliament today. Overall, the Winter Session of the Parliament has turned out to be better than expected with the ruling UPA-coalition managing to push through the contentious retail FDI Bill, and a few other important Bills like anti-money laundering and debt recovery.

For a change, investors turned their attention back to large cap stocks, after having chased second line shares over the last few days.

The 30-share Sensex was up 182 points at 19,592 and the 50-share Nifty was up 50 points at 5959.

Market breadth on the NSE was impressive, with nearly 9 stocks rising for every 4 that fell.

Healthcare, banking and FMCG shares figured among the key gainers in early trade. Banking shares continued to build on Monday's gains in the hope of the Banking Laws Bill being passed.

Hindustan Unilever, Sun Pharma and ICICI Bank led gainers in the frontline space, climbing 2-4 percent.

Bharti Airtel, Tata Steel, Mahindra & Mahindra, and Tata Motors figured among the laggards, trading flat.

Jet Airways, Sintex, SpiceJet, Opto Circuits and Greaves Cotton led midcap gainers, up 2-3 percent.

The BSE benchmark Sensex today recovered by over 194 points in early trade on fresh buying by funds and retailers on expectations of a rate cut by the Reserve Bank in its monetary policy review next week.

The 30-share barometer, which has lost over 77 points in the past two trading days, rose by 194.08 points, or 1 percent, to 19,603.77, led by gains in stocks of healthcare, consumer durables, banking and realty sectors.

Similarly, the wide-based National Stock Exchange index Nifty moved up by 31.10 points, or 0.52 per cent, to 5,940.00.

Brokers said fresh round of buying by major players on hopes of an interest rate cut by RBI in its December 18 mid-quarter monetary policy review amid a mixed trend in Asian markets buoyed the trading sentiment.

Meanwhile in Asia, Hong Kong's Hang Seng index rose 0.37 percent, while Japan's Nikkei shed 0.22 per cent.

The US Dow Jones Industrial Average ended 0.11 per cent higher in yesterday's trade on expectations that Federal Reserve will take fresh economic stimulus measures this week.