The Hindu Business Line : Sensex yo-yos, but ends flat

Mumbai, Oct. 7 The mood in the domestic equity markets remained cautious on Tuesday despite measures by the Securities and Exchange of India and the Reserve Bank of India to boost liquidity. The Sensex and the Nifty closed flat after a choppy session.

The Sensex opened with a huge positive gap of over 250 points and touched an intra-day high of 12,181 points, no doubt in response to the previous day’s announcements, said analysts. However, the uncertainty in the market was so persistent that it led to a fall of over 600 in mid-session, taking the Sensex to an intra-day low of 11, 501.

The Asian markets continued to reel under selling pressure; the Japanese Nikkei index closed 3.03 per cent lower. The other Asian markets showed a mixed trend, with South Korean, Taiwan and the Singapore indices closing in the green after choppy sessions.

European markets were in the green at the time of the closing of the Indian markets, and this provided some relief to the worried investors. The Sensex closed at 11,695, 106.46 points down from its previous, while the Nifty closed almost flat at 3606, up just 4 points.

Not in tandem

Throughout the session due to the intense volatility in the market, the two benchmark indices did not move in tandem. This was due to large transactions in heavyweight stocks which led to a huge difference in their NSE and BSE stock prices at various times during trading.

Despite SEBI lifting the curb on issue of P-notes by the foreign institutional investors, and the Reserve Bank of India cutting the cash reserve ratio by 50 basis points, there was no reversal in FII investment behaviour. They were net sellers of equities for Rs 680 crore as per the BSE-NSE combined provisional data.

Domestic institutional investors were net buyers of equities for Rs 548.29 crore.

The bulk deal data reported on the NSE and BSE indicated more selling of shares by FIIs such as Merrill Lynch, Morgan Stanley, Citigroup, and ABN Amro Bank in scrips such as Development Credit Bank, Ahmednagar Forgings, HTMT Global, Nahar Industries, Educomp Solutions, and Subash Projects.

Among the sectoral indices, BSE Capital Goods was the worst performer; BSE IT and Bankex were also among the top losers.

The advance-decline ratio showed an improvement from the previous session with 787 stocks advancing and 1,822 declining on the BSE.

Q2 expectations

Meanwhile several brokerage estimates have projected a bad second quarter performance from corporates, which also seemed to weigh on the market. The results season starts on Friday.