Sensex snaps five-day rally

Nifty ends below 5,000 as players square up pending futures positions.

Stock markets on Wednesday ended in the red after five days of consistent gains as investors resorted to profit-booking ahead of the expiry of the September series. Weak cues from the Asian markets also contributed to the fall.

Among major Asian markets, the Hang Seng slipped 105.62 points and the Shanghai Composite was down 54.83 points.

Jaiprakash Associates and Suzlon Energy were the biggest losers on Wednesday as their stocks lost over 6 per cent each on the news of treasury share sale by the promoters of these firms.

Three promoters of Suzlon Energy, the world’s fifth-largest wind turbine maker, on Wednesday offloaded seven crore shares of the company for an estimated Rs 689 crore, while the promoters of Jaiprakash Associates raised Rs 962 crore through the sale of treasury shares.

The Nifty slipped below the 5,000-mark, which was achieved only yesterday, and closed 50.25 points down at 4,969.95 as market participants indulged in squaring up their pending futures positions ahead of the derivatives expiry.

On the other hand, the Sensex, which had gained 4.14 per cent in the last five trading sessions, ended down 166.93 points, or nearly 1 per cent, at 16,719.50.

Among the sectoral indices, the BSE realty index declined the most even as Jaiprakash Associates raised Rs 962 crore through treasury stake sale. Other losers were IT (1.72 per cent), FMCG (1.29 per cent), Power (1.12 per cent) and Auto (1.07 per cent).

The markets gained significantly this month, building concerns that the stock prices were a bit over-stretched — a fact that weighed on the market sentiment on Wednesday. This month, the Auto index had gained 12.23 per cent, Bankex 12.69 per cent and the IT index 9.35 per cent.

“Volatility is expected to be high as we are going to see the September F&O contract expiry tomorrow. The rollover figures have improved on the index as well as stocks futures front. On the fundamental side, our markets are strong but a bit overbought. So, they require some correction, which may happen after the expiry. The Nifty is having support at 4,946 and 4,931, while the resistance is there at 5,030 and 5,068,” said Alex Mathews, the head of Research Centre, Geojit BNP Paribas Financial Services.

The mid-cap and the small-cap indices were down 1.23 per cent and 1.37 per cent, respectively.

Bharti Airtel slipped 3.43 per cent as investors were cautious as the Bharti-MTN deal was facing regulatory hurdles. Other major losers were Reliance Communications (2.94 per cent), Mahindra & Mahindra (2.61 per cent), Hindustan Unilever (2.38 per cent), Reliance Infrastructure (2.34 per cent), Larsen & Toubro (2 per cent), Hindalco (1.86 per cent), Infosys (1.66 per cent), TCS (1.60 per cent) and Wipro (1.57 per cent).

Siddharth Bhamre, head of Investment Advisory and Derivatives at Angel Broking, said: “The markets ended in the negative zone because there were long unwinding and some correction in metal prices on the London Metal Exchange.”

Bhamre, however, does not see any major correction and, hence, he advises against shorting. “The Nifty is likely to settle around 5,000 tomorrow as the 5,000 strike has the maximum open interest,” he said.

The market breadth on Wednesday was negative with 1,785 stocks falling and 1,001 advancing out of a total of 2,865 stocks on the BSE.

According to the provisional BSE data, both foreign institutional investors and domestic institutional investors were net buyers of Rs 1,748.99 crore and Rs 500.47 crore, respectively.