Markets hold on to gains, capital goods rebound

Markets bounced back in the morning session and held on to gains buoyed by capital goods shares. The S&P CNX Nifty was up 22 points, at 5,407 and the benchmark Sensex advanced 78 points, at 18,070.

Market analysts said that the bounce will only last for a brief period as Nifty continues to look weak on the technical charts. Kunal Bothra, Technical Analyst from LKP Securities said, The Nifty is trading below the 5450 forming lower highs and lower lows. Till the time the markets are below this level, there will be sustained selling pressure in the markets.”

Additionally Bothra said there has been a sustained selling from the Foriegn Institutional Investors (FIIs) even on day’s such as Friday when the markets were up. FIIs have sold shares worth over $1.5 billion in cash so far this month. Bothra said there has been no sectoral leadership as well which can provide the adequate support to the markets.

BSE Capital Goods continued to lead the gains on bargain buying as it was the top sectoral loser yesterday. Crompton Greaves advanced 3%, BHEL surged 1.9% and Suzlon was up 1.8%.

------------------------------------- Updated at 09:30 hrs

Markets bounced back in the morning session after the steep sell-off yesterday, however analysts advocate caution as earnings concerns and heightened volatility ahead of derivatives expiry this week.

The S&P CNX Nifty was up 16 points, at 5,405 and the benchmark Sensex advanced 78 points, at 18.069.

Derivative Analysts expect weakness to persist and selling pressure could take the Nifty down to 5200, a decisive uptrend could only be seen Nifty closes above 5,500. Foreign Institutional Investors were net sellers of Rs 293.56 crore in cash yesterday while the Domestic Institutional Investors were net buyers of Rs 194.2 crore in equities.

European debt concerns and weakness across Wall Street kept investors cautious in Asia this morning. The Nikkei Stock Average slipped 0.1% led by losses in auto shares on worries off growth slowdown in China. Hong Kong's Hang Seng was also down marginally by 0.1% due in Chinese metals and property developers. China's Shanghai Composite index was down 0.7%.

Among individual stocks, investors will closely watch DLF, top-listed realty firm as it is expected to post fourth quarter results today. The stock was up 0.5% at Rs 224.

BSE Realty shares were among the top losers, the index was down 0.7%. DB Realty was off 3%, Godrej Properties fell 1.9% and Unitech was off 1.4%.

From the broader markets, the smallcap and midcap indices were trading flat, down 0.2% each.

Among the gainers on the Benchmark, Hero Honda was up 1%, Bharti Airtel gained 0.8% and Reliance Industries was up 0.6%. Top losers on the Sensex were Hindalco, down 2.6%, State Bank of India slipped 0.4% and JP Associates declined 0.3%.

Market breadth was positive, 829 stocks advanced for 630 declining shares.