Market snaps 10-day winning streak; Nifty below 6,700

A recovery from lower levels in the last hour of trade led by buying in banking, metals and realty stocks, capped losses

Market snapped its 10-day winning streak as investors booked profits at higher levels in banking, oil & gas and capital goods stocks. Sentiment came under pressure on Tuesday after HSBC Purchasing Managers' Index data showed that economy's largest sector -- services -- continued to contract in the month of March.  

Both Sensex and Nifty slipped in morning deals after hitting ninth consecutive fresh intra-day highs, and extended losses in noon deals. However, recovery from lower levels was staged in the last hour of trade led by buying in banking, metals and realty stocks.

The 30-share BSE Sensex closed 42 points lower at 22,509 levels and NSE Nifty slipped over 16 points at 6,736 levels.

Among index heavyweights, BHEL, Coal India, GAIL, SBI and Axis Bank closed 2-3% lower followed by ONGC,  Tata Steel and Bharti Airtel which tanked 1%.

“Nifty has been witnessing a formation of "Hanging Man" for past three trading sessions which is considered as a bearish reversal pattern. However, we expect further downfall in the markets only once Nifty breaches the support of 6660 in near term. Till then we continue to remain bullish and expect buy to emerge on every dips,” says Hadrien Mendonca, Technical Analyst at IIFL.

During the day India VIX, a key measure of market's expectation of volatility over the near term, tested its 4-month high levels, only to settle 1.37% lower at 25.14 as market recovered in last 15 minutes.

Chandan Taparia, Derivative analyst at Anand Rathi says “Rising VIX indicates that now risk of taking fresh positions will rise as we head towards elections and volatility will increase based on opinion poll and election results”

“When volatility rises sharply then investor and traders shift to defensive stocks from fmcg, pharma and technology stocks. So being the higher vol we may see some support base buying coming in all these sectors,”

Service sector failed to pickup in March as contraction continued for the ninth straight month. The PMI services stood at a three-month low of 47.5 points in March compared to 48.8 points in February -- indicating a contraction. In February, the index had inched up from 47.7 points in the previous month. A PMI reading below 50 marks a fall, whereas one above that indicates growth.

Sectors & stocks

On BSE sectoral indices, BSE bankex slipped 1% and was the top loser followed by capital goods and oil & Gas, down 0.8%. Realty and power edged 0.4% lower while IT slipped marginally.

BSE Healhcare was up 0.9% followed by metals and consumer durables.

Among pharmaceutical stocks Wockhardt, up 8.8% at Rs 600.85 on BSE, was the top gainer. Ranbaxy was up 5% at Rs 424.80.

IDFC ended 2.3% lower at Rs 124.95 levels on account of profit booking after rising as high as Rs 139.15 on the Bombay Stock Exchange (BSE). The stock was in focus after the Reserve Bank of India (RBI) granted in-principle bank licence to the company.

Spice Jet closed 2.8% higher on the Bombay Stock Exchange (BSE) on Tuesday, extending Wednesday's sharp rally after state-run oil marketing companies on Tuesday announced reduction in the price of aviation turbine fuel. Also the airline claimed that it recorded 220,000 bookings on Tuesday, as customers lapped up tickets with a base fare of Re 1. Typically, the airline sells 40,000 seats a day.

Around the globe

Stocks in Japan rose to their three-week high levels, led by gains in construction equipment makers on news that China is taking steps to stimulate its economy, and a weakening currency. The US dollar hit a 10-week high to the yen after solid US economic data.

The Nikkei ended 0.8% higher to 15,071.88 points, the highest close since March 11.

The broader Topix rose 0.5% to 1,216.77. The JPX-Nikkei Index 400, a gauge comprised of companies with a high return on equity and robust corporate governance, added 0.6 percent to 11,029.28.