Markets: A sedate start to the week

The benchmark indices had a positive closing post Friday's battering and the gyrations witnessed through the course of the past week. The markets had a stable morning session and actually threatened to end the day with runaway gains (Sensex was up nearly 200 points mid-noon) before losing the plot in the face of sudden volatility in the last hour of trade. The Sensex ended above the psychological 18k mark at 18037, higher by 29 points, but the Nifty was unable to sustain the 5400 mark and ended virtually unchanged at 5396. This should still qualify as a decent close, given that the Sensex had plummeted more than 400 points on Friday after oscillating in a 700-pts range through the week.

The broader markets did not enjoy a respite in selling pressure though; the midcap index ended at 6699, lower by 34 points and the smallcap index shut shop at 8261, down 69 points. And the market breadth was negative; out of 2948 stocks traded on the BSE, there were 1146 advancing stocks as against 1623 declines.

On the global front, the US stocks had risen on Friday, reversing losses and sending the Standard and Poor's 500 Index to the highest level since June 2008, after unemployment rates unexpectedly dropped and more companies beat earnings estimates; the Dow rose 29 points at 12,092 and Nasdaq climbed 15 points at 2,769.30. The Asian markets had a mixed day; the Nikkei and Seoul indices gained around half a percent each, while the Hang Seng index shed about a percent. And the European markets were up around a percent each in mid-day trades.

Back home, the government estimated the GDP for the 2010/11 fiscal year to grow at 8.6% and was optimistic that India would move up in global GDP rankings to within the top 10 economies. India's farm output may grow 5.4%, industrial growth should reach 6.2% and the service sector is projected to grow by 11% in the current fiscal ending in March, the government statement said. India's economy has grown at 8.9% for two consecutive quarters in the current financial year.

The markets would be keenly watching all-party meeting convened by the finance Minister Pranab Mukherjee on February 8 to resolve the parliamentary deadlock on the issue of the Joint Parliamentary Committee (JPC) probe into the 2G spectrum scam. Any movement in the direction of ensuring a smooth Budget session is likely to have a positive effect on the immediate market sentiment.

"We, as a country, are doing fine and there may be liquidity tightening measures that we will see in short term.  The major concern is inflation and various scams which has dampened the markets. The market is getting impacted because of the foreign institutional investors' (FII) inflows are becoming negative in this calendar year. I do not know that FIIs will be buyers or sellers, but I can see that the lead indicator is economic performance", said Motilal Oswal, chairman and managing director, MOFSL.

Hero Honda strengthened by 2.7% at Rs 1577 to emerge as the leading gainer on the BSE. ITCgained by 2.6% at Rs 156 and DLF added 2.3% at Rs 242. And index heavyweight RIL added 1% at Rs 929.

On the other hand, Cipla weakened by 2.9% to Rs 314 to top the losers list on the BSE after net profit declined 19.49% to Rs 232.69 crore (as against Rs 289 crore) on a 11.70% rise in net sales to Rs 1501.36 crore in Q3 December 2010 over Q3 December 2009. HDFC shed 2% at Rs 592 and Wipro lost 2% at Rs 426.