Budget session begins; Nifty ends below 8,800

Markets started the week ahead of the Budget session on a sluggish note, amid a choppy trading session, on sustained selling in energy and select banking shares.

Further, investors turned cautious and booked profits ahead of the key events including Economic Survey, Railway Budget and Union Budget along with the expiry of February derivative series due later during the week.

The 30-share Sensex ended 256 points lower at 28,975 whereas the 50-share Nifty lost 79 points to close at 8,755.

"This decline shows cautiousness among the participants’ ahead of the major events i.e. Railway budget, F&O expiry and the Union Budget. And, they wish to go light, considering the possibility of excessive volatility in coming sessions. Moreover, lack of participation from the banking space is also hurting market sentiments and making them more guarded. Defensive stocks are still holding ground so traders should continue to prefer stocks from IT, FMCG and pharma space for fresh long positions," said Jayant Manglik, President-retail distribution, Religare Securities in a post market note.

"On the other hand, negative bias is intact in energy, metal and PSU banking space so choose stocks from these sectors for short positions," he adds.

Foreign institutional investors (FIIs) were net sellers in Indian equities to the tune of Rs 89 crore on Friday, as per provisional stock exchange data.

Despite the fall, the broader trend, analysts say, is still intact and current sell off is nothing but adjustment of over retracement in the short term.

"Nifty has next major support in the region of 8,710/8,685 levels. Failure to hold may lead to more weakness to 8,600/8,575 levels. However, medium/positional traders should use 8,700 and 8,600 levels as an opportunity to buy growth oriented stocks. Stable Crude prices and Currency below 63 are going to support the market in the near-term,” says Shrikant Chouhan, head of technical research, at Kotak Securities.

COMMODITY CORNER

Gold hovered around the key $1,200-an-ounce level on Monday, its lowest in seven weeks, as support for the safe-haven metal eased after a deal was struck over Greece's debt, while the absence of major consumer China also took a toll.

Oil prices dipped on Monday on worries about oversupply in North America, with Brent futures testing support around $60 a barrel and U.S. contracts hovering around $50.70.

RUPEE

The rupee strengthened by seven paise to 62.15 against the US dollar on Monday at the Interbank Foreign Exchange on increased selling of the American currency by exporters and banks.

KEY STOCKS

On the sectoral front, all sectoral indices ended in the negative territory. BSE Consumer Durables and Oil & Gas indices emerged as the biggest losers down 2% followed by Bankex, FMCG and Realty indices dropping over 1% each.

RIL shed nearly 3% and emerged as the top loser. The stock had lost close to 3% in the last session over the corporate espionage controversy.

The country's largest lender, State Bank of India lost 2.4%. It plans to overhaul its transaction banking business, which will include involving trade finance and IT platform-based servces for liquidity management.

Infosys is evaluating a dozen more startups after acquiring an automation startup Panaya for Rs 1,200 crore with an aim of gaining cutting-edge technology such as automation and artificial intelligence (AI). The stock dropped 0.6%.

Hindalco lost over 1% on profit booking. Last week, Hindalco won the Gare Palma IV/4 coal block in Chhatisgarh for Rs 3,001 per tonne, according to the results of e-Auction for Schedule II coal mines announced by the Ministry of Coal on Friday, 20 February 2015.

FMCG majors HUL and ITC ended the session on a weak note slipping over 1% each.

Other major losers include Axis Bank, GAIL, ONGC, HDFC, Tata power down over 1% each.

On the flip side, the market valuation of TCS surged by Rs 26,677.87 crore at Rs 5,23,930.35 crore. Stock was up 0.7%. 

A smart rally was evident in the  capital goods sector on expectations that the government will increase infrastructure spending and announce incentives to the manufacturing sector to boost growth. L&T surged nearly 1%.

Shares of  Mahindra & Mahindra witnessed buying interest as a media report suggest that the Swedish luxury carmaker Volvo is looking for a partner for its manufacturing plant in India. The stock was up over 1%.

Sesa Sterlite gained 0.6% after the company’s subsidiary Bharat Aluminium Company (Balco) bagged one more coal block and total two mines in the first tranche of auction.

State-owned Coal India (CIL) is gearing up to invest about Rs 6,000 crore towards capital expenditure in the next fiscal and an equal amount on augmenting other infrastructure, including rail connectivity. Stock climbed nearly 0.2%.

In the broader market, both the BSE Midcap and Smallcap indices were down between 0.3% and 1%. Market breadth ended weak  on the BSE with 1,700 declines against 1,194 advances.