The noon session turned out into a dampener for the markets. After having a stable morning, the benchmark indices slipped into the red in the late-noon hours due to the overhang of the Vedanta-Cairn deal and the unenthusing start on the European bourses. The Sensex actually dipped below the 18k mark at one point, but recovered partially to shut shop at 18050, lower by 116 points or 0.7%, and the Nifty ended at 5418, down 33 points. The broader market space continued with its relative outperformance though; the midcap index ended at 7648, higher by six points and the smallcap index ended at 9685, down 24 points.
The European markets had an insipid start to trade, thanks to the unenthusing cues from the Asian front. And the FTSE, CAC and Dax continued to languish thereafter, shedding upto half a percent each. Asian shares had a sluggish time as data showed Japan's economic growth stalled in the second quarter, adding to worries that a global recovery may be hitting roadblocks. Hang Seng edged sideways, while the Nikkei ended lower by 0.6%. Moreover, the US stock index futures suggest that Wall Street could open around lower by around 0.3%.
Meanwhile, on the macro-economic front, the annual headline inflation slowed more sharply than expected to single digits after five months. The wholesale price index rose 9.97% from a year earlier compared with June's pace of 10.55%.
Cairn India shaved off as much as 6.3% to end at Rs 332 after the company announced the sale of a maximum 51% stake in Vedanta for a consideration of upto $8,480 million (Rs 39,656 crore). Earlier in the day, the shares had jumped over 3% to hit a 52-week high in anticipation of the buyout development. And Sesa Goa tumbled 8.9% to Rs 322 after the company's board approved the acquisition of a 20% strategic stake in Cairn India for a total cash consideration of approximately $3 billion.
Suzlon Energy slipped by 7.2% to Rs 52 after the company posted consolidated net loss of Rs 912 crore for the June 2010 quarter as against Rs 453 crore during the same quarter a year ago. The company's consolidated net sales declined 42% to Rs 2,399 crore (Rs 4,153 crore) on y-o-y basis during recently concluded quarter.
Among the Sensex-50 scrips, Cipla saw profit-booking after its recent gains, weakening by 3.6% to end the day at Rs 304. Reliance Infra ended at Rs 1046, lower by 3.4%. And RCom ended at Rs 163, down 2.7%, after the company posted a 85% drop in a consolidated net profit to Rs 251 crore for the quarter ended June 2010 compared to Rs 1,637 crore in the same quarter of the previous year.
And on a day which brought some cheer on the inflation fron, the banking sector moved lower in line with the broader markets. State Bank of India, the country's largest lender, weakened by 1% at Rs 2820 after raising its benchmark lending rate by 50 basis points to 12.25%, making home, vehicle and other corporate loans linked with the rate costlier to existing borrowers. ICICI Bank ended at Rs 957, lower by 1.8% and HDFC Bank ended at Rs 2083, down 0.1%.
On the other hand, Hindustan Unilever continued its good recent run, gaining 1.5% at Rs 269 and giving it company was another FMCG behemoth, ITC, which added 1.2% at Rs 158. Hero Honda strengthened by 0.4% at Rs 1891 and Maruti added 0.3% at Rs 1253.
The debutant of the day, SKS Microfinance ended at Rs 1084, stronger by around 10%, on the NSE. The stock had listed at Rs 1,040, a 6% premium to its issue price of Rs 985 a share, and touched a high of Rs 1,155 before seeing a partial retracement.
The market breadth understandably turned negative at close. Out of 3070 stocks traded on the BSE, there were 1267 advancing stocks as against 1698 declines.
