Markets sluggish; Nifty hovers at 7250

Hindustan Unilever, pharma stocks in good health, while rate-sensitives nervous ahead of credit policy on June 3.

The markets are trading in a listless manner this afternoon in the absence of any cues from the global front. The Sensex is at 24,367, higher by 31 points and the Nifty is at 7,242, up six points. The midcap index is at 8,484, higher by 50 points and the small cap index is at 9,044, up 59 points.

 

Asia had a mixed day, with the Hang Seng and SET gaining about half a per cent each, while the Nikkei and Taiwan losing by a similar measure. The European markets, including the FTSE, CAC and DAX, were flat in early trades. Overnight, the Dow Jones had risen 16 points to 16,650, the S&P 500 gained five points to 1,915 and the Nasdaq had added 14 points to 4,239.

 

But considering that on Thursday, the Nifty had surprisingly posted its largest single-day decline in nearly four months and the Sensex recorded its highest fall since February 3 this year, this should be regarded as a good session by the market participants. Moreover, with the markets slipping into a consolidation mode since May 16, one would have to look at the credit policy on June 3, the Budget in the begining of July and/or some big-ticket reform measures on the part of the new government to give a further direction to the markets.

 

On the derivatives front, traders rolled over fewer positions into the June derivatives series, signalling that they could have taken some risk off the table following sharp gains in May. The rollover percentage of Nifty futures in the May series onto the next month was 60 per cent, in line with the previous month expiry but lower than its three-month average of 65 per cent. Marketwide rollovers stood at 64.5 per cent as against the three-month average of 62.7 per cent.

 

On the monetary front, the rupee is stronger at 58.9600/58.9650 versus its previous close of 59.03/04, as dollar inflows from Yes Bank Ltd's share sale for 500 million dollars aided the rupee's gains.

 

In economy-related news, Reserve Bank of India (RBI) Governor Raghuram Rajan said on Friday he expected to join hands with the country's new government to bring down dangerously high inflation. Rajan, speaking at a seminar in Tokyo, said the new government's plan to curb food inflation seems sensible and that he expects the public's inflation expectations to fall in the future.

 

Hindustan Unilever has zoomed by 5.3% at Rs 587 to top the gainers list on the BSE. NTPC has gained 2.7% at Rs 156 and ONGC has added 2.2% at Rs 383. The pharma stocks are also in good health, with Cipla strengthening by 2.1% at Rs 381, Dr Reddy's gaining 2% at Rs 2427 and Sun Pharma adding 1.7% at Rs 597.

 

On the other hand, the rate-sensitives are nervous ahead of the credit policy next week. HDFC has weakened by 2.7% at Rs 868 to top the losers list on the BSE. Among the other financial names, SBI has shed 1.8% at Rs 2551, Axis Bank has shed 1.3% at Rs 1840, HDFC Bank has lost 1.1% at Rs 801 and ICICI Bank has lost 0.6% at Rs 1428. In the auto space, Tata Motors has lost 1.3% at Rs 418 and Maruti has lost 0.8% at Rs 2287.

 

The market breadth is positive. Out of  3000 stocks traded on the BSE, there 1,520 advancing shares as against 1,373 declines.