Market rebounded sharply from their day lows to end flat, amid positive European cues, after gains in index heavyweights helped offset most of the losses in metal and rate sensitive shares. The 30-share Sensex provisionally ended down 26 points at 17,198 and the 50-share Nifty ended down 12 points at 5,216.
Earlier in the day, key benchmark indices lost 1% each tracking fall in overnight global markets and Asia, as the weakening rupee coupled with the MET department's forecast of deficient monsoon rains dampened investor sentiment.
In the broader markets, the BSE Midcap index and the Small-cap closed down 0.2% and 0.1% respectively in line with the Sensex.
Adding to the macro woes, the India Meteorological Department (IMD), for the first time, officially hinted at a drought-like situation, saying the southwest monsoon over India in 2012 is likely to be deficient at below 90 per cent of the Long Period Average.
Asian shares eased on Friday as the European Central Bank, after inaction from the Federal Reserve, disappointed markets looking for an imminent move to deal with the euro zone debt crisis, spurring risk aversion. Shanghai Composite, Jakarta Composite, KLSE Composite and Straits Times which added between 0.1-1% were the only gainers.
European shares and the euro staged a significant recovery on Friday from a big selloff provoked by the European Central Bank's failure to satisfy investors' hopes of swift action to tackle the debt crisis. The market's attention is likely to switch temporarily from central bank policy to the outlook for growth, with July U.S. non-farm payrolls data, due at 1230 GMT, expected to show job creation running at weak levels. CAC, DAX and FTSE gained 1-2%.
Among the sectoral indices, Metal and Auto indices closed down 1% each. Bankex, Realty, FMCG and Capital Goods lost 0.3-0.6%.
Metal shares were trading lower after the metal gauge on the London Metal Exchange; LMEX ended 1.3% lower on Thursday. Tata Steel, Hindalco and Sterlite were down 2- 3%.
In the capital goods segment L&T was down 0.5%.
Bank shares were down on concerns that lower lending rates would hurt margins going forward. SBI has recently announced cut in home and auto loan rates. SB and ICICI Bank lost 2% and 0.5% respectively.
Auto shares were down on concerns of slowdown in sales growth in the wake of rising fuel prices and high interest rates on auto loans. Mahindra & Mahindra, Tata Motors, Maruti Suzuki, Bajaj Auto and Hero Motocorp were down 0.4-2% each.
Realty shares were down on concerns of high inventory levels as home buyers are reluctant to purchase new homes because of high realty prices and interest rates on home loans.DLF, HDIL, Sobha Developers, Indiabulls Real Estate were down 0.5-3% each.
Shares of sugar manufacturers are in limelight on the bourses with most of the frontline stocks trading higher after August contract rose nearly 2% on the National Commodity and Derivatives Exchange (NCDEX). Among the individual stocks Balrampur Chini Mills, Shree Renuka Sugars, Bajaj Hindustan. Dhampur Sugar Mills and EID Parry are trading higher by 1-5%.
Among other shares, Jet Airways was trading higher by 2.5% at Rs 374, extending its 15% rally in past four-trading sessions, ahead of its first quarter financial results scheduled to be announced later today.
Glenmark Pharma was up 5% at Rs 409 after reporting a 20% year-on-year growth in its consolidated revenues at Rs 1,040 crore for the quarter ended June 2012, on back of strong growth registered by its generic business. Revenue from the generics business grew 58% at Rs 530 crore on y-o-y basis.
Accelya Kale Solutions soared 5% to Rs 167, extending its previous day rally on over 30-fold rise in trading volumes. The stock of mid-cap IT Company has zoomed 32% in past two trading sessions from Rs 133 after reporting over four-fold jump in consolidated net profit at Rs 12.98 crore for the fourth quarter ended June 2012, on the back of higher operational revenues.
Dishman Pharmaceuticals and Chemicals too, surged 6% to Rs 79.90 on the BSE. The stock has surged 30% in past five trading sessions, on reporting an over two-fold increase in consolidated net profit at Rs 38.70 crore for the quarter ended June 30, 2012. The company had posted a net profit of Rs 15.12 crore for the corresponding period in the previous fiscal.
Oracle Financial Services soared 6% to Rs 2,775, after reporting 80% year-on-year jump in consolidated net profit at Rs 368 crore for the quarter ended June 2012.
The market breadth was negative on the BSE. 1514 stocks declined as against 1263 advances.