Sensex snaps losing streak, but outlook remains cautious

The Sensex snapped an eight-session losing streak on Tuesday, climbing 100.47 points to close at 19561.04 even as industrial output and inflation numbers for December underscored the weakness in the economy.

Dealers attributed the today's rebound in share prices to short covering of derivative positions and said near term outlook remained cautious.

The Nifty closed at 5922.50, up 24.65 points over the previous close.

Unitech and DB Realty shares plunged about 18 percent each following reports of collusion between the CBI prosecutor and the company officials to sabotage the investigation of the 2G scam.

Overall, investors continued to ignore second line shares and chose to nibble at frontline stocks which perceive to be more reliable in a bearish market.

ONGC led gainers in the Nifty and Sensex, with the stock climbing nearly 4 percent on better than expected third quarter earnings. While net profit fell 17.5 percent, the numbers were better than what most analysts had expected.

HCL Tech, Sun Pharma and Tata Motors were the other key gainers, rising about 3 percent each.

Oil & gas, healthcare, auto and banking stocks were among the best performers of the day, while realty shares took a beating.

Industrial output for December declined 0.6 percent, with sharp contractions observed in the consumer goods and consumer durables space.

To further add to the gloom, consumer price inflation climbed to 10.79 percent in January, up from 10.56 percent in December. Rural consumer inflation rose to 10.88 percent from 10.74 percent month-on-month and urban inflation climbed to 10.73 percent from 10.42 percent.

Market expectations from the Budget have receded further in the last few days as it is apparent that the problems of the economy are structural and the recovery will be a long drawn process.

Jindal Steel and Power, IDFC, ACC and DLF figured among the major laggards of the day, falling between 1.5-3.3 percent.

There was a slight recovery in afternoon trade. The Nifty held above the key 5900-levels led by oil & gas and autos even as capital goods and realty slumped.

The Sensex was up 56.68 points or 0.29% at 19517.25 while the Nifty rose 11.75 points or 0.20% at 5909.60. The midcap index was down over half a percent.

Sentiment in market was dented after industrial output in December fell to negative 0.6 percent, which is lower than the 0.8 percent decline (revised from 0.1 percent) seen in the month before. A CNBC-TV18 poll had estimated the index of industrial production (IIP) for December at 1.1 percent.

Top gainers on the BSE were ONGC (2.5%), Sun Pharma (2.2%), Bharti Airtel (1.9%) and Reliance (1%).

From the earnings calendar-JP Associates slumped after margins slipped below estimates to just over 22% and the bottomline fell more than 60%. SAIL and  JSPL are the key numbers to watch out for today

Top losers on the Sensex were Jindal Steel, Infosys and Sterlite Industries

Meanwhile, the fallout of 2G scam sliced through the realty index, with Unitech cracking 20%. In a Network18 exclusive, the CBI suspected its own prosecutor of aiding Unitech MD Sanjay Chandra, one of the accused in the 2G case. Unitech responded saying Sanjay Chandra never met prosecutor AK Singh on the 2G case.

DB Realty too collapsed (down 15.9%) on revelation that Shahid Balwa's name is mentioned in the telephonic conversation between Singh and Unitech's Chandra.

Nifty gave up all its gains as December Index of Industrial Production  (IIP)reflected sluggisness in the economy. December IIP came in at negative 0.6 percent, pulled down by sloth manufacturing and consumption growth. A CNBC-TV 18 poll had expected it at 1.1 percent. Bond yields moved up and the INR depricated to fresh two -week high level of Rs 53.96 to a dollar.

At 11.21 AM, the Sensex fell 9.34 points at 19451.23, and the Nifty went down 6.55 points at 5891.30.

ONGC was rewarded by investors after it posted better-than-expected numbers and remained topper on the bourses. The stock bolstered it gains to trade 2.6 percent up at Rs 316 per share. Private sector banks were marginally up with HDFC Bank, ICICI Bank and HDFC in the lead. Public sector banks like SBI and Bank of Baroda were trading marginally lower than their previous closing figues.

In auto space Bajaj Auto, Maruti Suzuki and Tata Motors were up around 1 percent. JP Associates was the biggest index loser after it posted disappointing quarterly numbers, the stock was down 4.5 percent. Infosys and TCS werte trading with 2 percent and 0.5 percent cuts respectively.

Unitech and DB Realty remained biggest losers in trade, both falling nearly 20 percent. HDIL and Indiabulls fell 5.5 percent each.

Equity markets in India opened stable with support from FMCG, Auto and capital Goods sectors which were sold into in the previous session. Banks were the major gainers while pharma and IT were adding pressure on the indices. The first trades belie growth concerns sounded by Reserve Bank of India Governor that the country was headed for the highest ever current account deficit this fiscal year.

At 09.19 AM, the Sensex moved up 36.50 points to 19497.07, and the Nifty was trading 8.80 points higher at at 5906.65. Most of Asia, except Nikkei, is closed on account of Lunar New Year holiday. Despite last ditch effort in the closing hours, the US markets closed in the red. Europe had ended mixed.

Axis Bank, Kotak Mahindra Bank, SBI, ITC, NTPC were the largecap winners, holding Nifty in the green. ONGC was the top gainer on Nifty with over 2 percent gains followed by Coal India which was trading with over 1 percent gains. In the auto segment, Maruti Suzuki, Hero MotoCorp and Tata Motors ruled, each gaining 1 percent. JP Associates and Voltas were walloped by investors in the opening trade post their third quarter numbers.  Other important losers include Infosys, Wipro and Cipla, which were down on profit booking.

In the midcap segment, realty stocks were mutilated. Unitech opened 9.7 percent down and fell further down to 16% on news that the company had allegedly colluded with lead 2G prosecuter. CNN IBN has accessed a preliminary enquiry (PE) registered by the CBI on February 6 which states that AK Singh who represented the CBI in the 2G case has allegedly colluded with the accused Sanjay Chandra, MD of Unitech.

Other realy major DB Realty opened with a loss of near 5 percent and soon crashed below 16 percent.