Sensex pares early rally, ends flat on profit booking at 17,526.71

The Bombay Stock Exchange benchmark index Sensex today washed out its early smart gains and ended flat with a negative bais on heavy selling in select key counters despite firm global cues.

Updated: Jan 11, 2010, 17:27 PM IST

Mumbai: The Bombay Stock Exchange benchmark index Sensex today washed out its early smart gains and ended flat with a negative bais on heavy selling in select key counters despite firm global cues.

The Sensex had a big bang opening, soaring over 236 points. But later steadily continued to head downwards on heavy selling pressure in some of the blue-chip counters, taking the index to settle the day down at 17,526.71, falling 13.58 points or 0.08 per cent, stretching its losses for the third straight session.
The broader 50-issue Nifty of the National Stock Exchange too ended stable at 5,249.40 from its last close of 5,244.75, a small rise of 4.65 points or 0.09 per cent after a massive rally of 42.5 points.

Brokers attributed the early rally to firm Asian markets and strong December trade data from China.

Even good export figures which grew for the second month at USD 14.6 billion in December, rising 16 per cent, did not help the market hold on.
This was in sharp contrast to the overseas markets. Among the Asian markets, Nikkei ended higher by 1.09 per cent, Taiwan up 0.52 per cent, Hang Seng up 0.51 per cent, Shanghai rose 0.52 per cent and Strait rose 0.37 per cent while the Kospi ended flat with a downward bias.

Similarly, European markets opened in the green, with the CAS rising 1.03 per cent, the FTSE 1.03 per cent and the DAX 0.80 per cent.

Expectation of better Q3 results by Indian Inc starting from tomorrow with Infosys and hopes of sustained economic growth too initially helped the market.

Brokers said one of the reasons for the poor show of the market to the huge block deal that RIL transacted today at 1,050 a share. The country`s most valued firm suffered the most today after it raised Rs 3,465 crore through selling 3.3 crore treasury stocks for the second time this month.

The contribution of RIL to the Sensex fall was 44.21 per cent. "The treasury share sale created an overhang on the RIL, which pulled the stock down and market down," said Unicon Financial chief executive Gajendra Nagpal.

However, the marketmen and analysts are expecting a better day tomorrow for two reasons. Frist the Government will announce the November IIP data tomorrow. Also, Infosys will kick off the earnings season tomorrow.

Unicon`s Nagpal said, "the market failed to sustain the momentum, as action is shifting towards the Mid-cap and Small-cap counters. This shows that these stocks are reasonably priced and if corporates come out with good Q3 earnings markets have the potential to move upwards."

Bonanza Portfolio assistant vice-president Avinash Gupta agreed saying "the action remains in the Small-and Mid-caps."

On the sudden interest in the telecom counters, Gupta said the telecom sector rose today as the market realised that the impact of the tariff war may not be as severe as the market was making it out to be.

From the Sensex counters, RIL dipped by 1.85 per cent, Wipro by 1.03 per cent and BHEL by 0.95 per cent. However, DLF rose 2.34 per cent, JP Associates by 2.26 per cent, Grasim by 2.20 per cent, TCS by 1.96 per cent, Hero Honda by 1.69 per cent, Maruti Suzuki by 1.49 per cent and Bharti Airtel by 1.17 per cent.

"For tomorrow, Infosys numbers and the November IIP numbers will will set the tone for the market tomorrow. In case these event do not offer a surprise, the Mid- and Small-cap rally is expected to continue. Nifty is likely to move in a range of 5150 to 5350," said Gupta of Bonanza. Both the numbers are expected to be better.

The market is expecting an ecore of the October when the nation`s factory output recorded a robust 10.3 per cent growth.

Among the BSE sectoral indices, Oil&Gas dropped 118.01 points or 1.10 per cent, while Realty firmed up by 104.51 points or 2.57 per cent and Auto rose 67.79 points or 0.92 per cent.

Despite negative trend in the Sensex, reflecting rally in Small-caps and Mid-caps, the overall market breadth was strong as 2,117 counters ended with gains against only 832 shutting the shop in the red for the day.

The Small-cap index spurted by 156.75 points or 1.80 per cent and the Mid-cap by 62.42 points or 0.90 per cent.

The trading volume was relatively low at Rs 6,124.96 crore from Rs 6,322.38 on last Friday. RIL was the top traded share with the highest turnover of Rs 233.33 crore followed by ThinkSoft (Rs 176.55 crore), DLF (Rs 122.35 crore), Unitech (Rs 113.83 crore) and MBL Infra which was listed today (Rs 109.54 crore).