Indian Markets track global cues, close lower

February 4, 2010 - By Alex Mathews - Research head, Geojit

The markets had opened on a negative note tracking global cues and inched sideway to negative till the noon session witnessing some recovery in the early noon session. In the second part of the day, the bears came back to power and steered the markets movement down to touch the lowest point of the day and finally closed near to it. We saw selling pressure emerging across the sectors apart from selective buying in oil companies. The other day, US markets were subdued ahead of the Job data and our markets too opened lower. All the sectors had their reasons to take a dip with auto stocks slipping on fears of rise in fuel prices. IT sector slipped after a report showed that the US services industry expanded less than forecast while infrastructure stocks fell on fears of lower government spending on the sector. Metal stocks were down as metal prices were down on LME while telecom stocks declined on reports that the auctioning of 3G will be delayed.

Later in the afternoon session, the inflation numbers came in with food price inflation rising 17.56% in the week ended 23 January 2010 from 17.4% previously while fuel price index rose 5.88% triggering selling once again. Meanwhile, news came out that RBI has withdrawn the borrowing facility enjoyed through short term foreign currency of non banking finance companies and housing finance companies. Later the European markets were dull and negative as investors waited for the rate decisions from the European Central Bank and Bank of England later today. In the Asian front too markets were weak after Australian retail sales unexpectedly fell in December and commodity prices declined. Weakness in the US index futures too affected our markets and they came to a close with Sensex down 1.64% and Nifty down 1.75%.

Crude fell down on US inventory data and expectation of delayed economic recovery which translates to a low demand. US dollar Index was up against Euro in Euro zone worries causing wide spread selling in metals. On the sectoral front, major losers? were Realty down 3.89%, metal down 3.36%, auto down 2.12% and IT down 2.1% leaving no one on the gainers side.

Outlook for the market is cautious and a move below 4800 can cause major selloff. The frontline stocks like Reliance, Tata Motors, ICICI Bank, TISCO all lost their key supports and we may see continued selling in these counters. Nifty is having support at 4767 and 4700 while the resistance is there at 4900 and 4936 levels.

Source : Equity Bulls

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