Markets have a dismal closing

The markets nosedived in the closing hour of trade, spooked by rollover pressures on the last day of the January derivatives series and the continuing concerns on the inflation front. The Sensex ended below the psychological 19k mark at 18,688, lower by 281 points, and the Nifty shut shop at 5607, down 80 points, with the realty, metal and banking counters accounting for most of the carnage. The midcap index ended at 7080, lower by 142 points and smallcap index  ended at 8858, down 126 points. In the process, the benchmark indices closed below their 200-DMA (18730 on the Sensex and 5624 on the Nifty), which is considered as an important long-term technical indicator for determining the health of the markets.

The markets had opened on a steady note, but from thereon it was a gradual decline that culminated a loss of around 400 points from the highs of the day. Volatility ruled the roost as the market participants rolled over their positions in the derivatives segment to the February series as this was the expiry day of the near-month contracts. Moreover, there were lingering fears surrounding inflation, and its corollary, a possible albeit calibrated rise in the interest rates. The RBI had raised the repo rate by 25 basis points to 6.5% and the reverse repo rate by 25 basis points to 5.5% at its quarterly policy review on Tuesday and has already hinted at the possibility of similar measures at its March meet.

The tremors experienced on Dalal Steet, howeever, did not find their resonance elsewhere. The Asian markets had a mixedn day; Hong Kong's Hang Seng ended marginally lower as Chinese developers tumbled, while Japan's Nikkei advanced nearly a percent on strong earnings expectations and a firm Yen, and Taiwan and Seoul ended up about half a percent. The European indices, including the FTSE, CAC and DAX, had trading in a directionless manner in the middle of the day. And pre-market activity in Dow futures actually suggests a marginally positive opening on Wall Street. 

The high-beta realty index surrendered a whopping 3.5% to end the day at 2398. The realty major, DLF shaved off 5.4% at Rs 249 to top the list of losers on the BSE. In the larger realty space, Lanco Infra slid by 8.3% at vRs 47, IVRCL Infra shed 6% at Rs 91 and Unitech lost 4% at Rs 53. Banking stocks declined on worries there may be further rate hikes by the Reserve Bank of India to tame inflation. ICICI Bank fell 2% at Rs 1016, extending the 4.2% losses on Tuesday, HDFC Bank fell 1.6% at Rs 2052 and SBI lost 0.9% at Rs 2653. And in the metal space, Sterlite weakened by 5.25 at Rs 169, Jindal Steel lost 2.2% at Rs 672 and Sail lost 4.5% at Rs 158. 

Hindustan Unilever, which had collapsed by 5.4% on Tuesday, after its Q3 net profit declined 1.78% to Rs 637.51 crore, shed another 3.7% at Rs 271. And index heavyweight RIL lost another 1.5% at Rs 943 in the wake of ongoing concerns surrounding a slowdown in gas production at the KG-D6 field.

Among the stocks to buck the weak trend, Tata Motors jumped 2.4% at Rs 1194 and TCS added 0.6% at Rs 1199.

The market breadth was negative. Out of 2885 stocks traded on the BSE, there are 1051 advancing stocks as against 1719 declines.