Sensex, Nifty in no-man’s land: Monday closing report

Nifty has to close above 5,950 for it to gain strength. Otherwise, it is headed lower

As the US government shutdown enters its second week with no hope in sight for a near-term resolution, Indian indices on Monday opened lower and were trading 1% down but gained strength in the second half of the day. In a remarkable intraday rally, the Sensex and the Nifty recouped the entire loss of the day and ended flat.
 

The market opened in the negative and both the indices hit the day’s low in the morning session itself. The Sensex which opened lower at 19,880 (down 35 points) from its previous close of 19,915.15, continued on a downtrend to hit an intra-day low of 19,647 (down 268 points or 1.35%). Post-noon, the markets started picking up and the Sensex hit a intra-day high of 19,921 before closing at 19,895.10 (down 20 points or 0.10%), ending three consecutive days of positive trading sessions. The Nifty closed the day at 5,906.15, 0.02% lower from its previous close of 5,907.30
 

Among the sector indices, banks got hit the most with the Bank Nifty closing 1.13% lower at 10,082.10 from its previous close. In the morning session, the bank index declined by over 3% to 9,877. The CNX PSU Bank index closed 0.64% lower at 2,197. All this while the rupee weakened further and ICICI bank raised an alarm over possible loan default by the Dabhol Power Plant.
 

Post the market close, banks would have a reason to cheer, as the Reserve Bank of India (RBI) announced measures to improve liquidity. The marginal standing facility (MSF) rate was reduced by a further 50 basis points to 9% from 9.5% with immediate effect. The RBI, in its press release mentioned that open market purchase operations of Rs9,974 crore were conducted today to inject liquidity into the system. It has also been decided to provide additional liquidity through term repos of 7-day and 14-day tenor for a notified amount equivalent to 0.25% of net demand and time liabilities (NDTL) of the banking system through variable rate auctions on every Friday beginning 11 October 2013.
 

Among the other indices on the NSE, the top five gainers were IT (1.31%), Pharma (1.07%), Media (1.04%), Metal (0.97%) and MNC (0.72%). The top five losers were Banks (down 1.13%), Finance (down 0.74%), PSU Banks (down 0.64%), Realty (down 0.38%) and Infra (down 0.32%)
 

Of the 50 stocks on the Nifty, 28 closed with a gain. The top five gainers were Ranbaxy (5.47%), Tata Steel (4.51%), BPCL (4.09%), TCS (3.06%) and Hindalco (3.05%). Among the 22 stocks which declined, the top five losers were Coal India (down 3.24%), Bharti Airtel (down 1.98%), Axis Bank (down 1.97%), ICICI Bank (down 1.50%) and Maruti (down 1.43%)
 

All major Asian indices closed negative. Hong Kong’s Hang Seng closed 0.71% lower at 22,973.95. South Korea’s KOSPI index closed 0.13% lower at 1,994.42. The Nikkei 225 declined 1.22% to 13,853.32. Japanese exporters relying on the US market were pressured with the US budget stand-off going nowhere.
 

European markets followed the Asian indices and opened negative on fears that the US is headed towards a credit default. The FTSE 100 was trading 0.84% down at 6,399.80 and the DAX was trading 0.95% down at 8,540.80. The US futures were trading about 0.8% down. A warning from US Treasury Secretary Jacob Lew that Capitol Hill is “playing with fire” if it doesn’t increase the debt ceiling in time only increased investors’ anxiety about the US budget standoff and looming deadline to raise the country’s debt ceiling.

Over the weekend, House Speaker John Boehner mentioned to news agencies that he sees no end to the standoff over shutdown without broader deficit negotiations.

 
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