Sensex in red, Nifty in green -Tuesday, October 07, 2008

After a promising start, key indices Tuesday fluctuated erratically through the day as stock prices moved in synchrony with news from the

global financial front. Sentiment remained weak since British banks were hammered on funding worries.
Bourses commenced on a strong footing following market regulator SEBI's move to lift curbs on foreign institutional investors imposed a year ago and a 50 basis points cut in cash reserve ratio by the Reserve Bank of India.

But the recovery was shortlived, with the Sensex and Nifty both hitting two-year lows in mid-afternoon trade.

Reports that the Royal Bank of Scotland and Barclays were in talks with the UK government for funding up to $79 billion rattled European markets, the tremors of which were felt in Indian markets as well.

Traders said a deepening global credit crisis and continued selling by foreign funds more than offset the central bank's liquidity-boosting measures.

"Indian markets are governed entirely by global cues, which is why, the might of the global liquidity crisis offset the positive measures taken by the regulatory authorities. Unless there is considerable improvement in sentiment in overseas markets, Indian markets will continue to remain volatile," said Hitesh Agarwal, head of research at Angel Broking.

Bombay Stock Exchange's Sensex ended 0.9 per cent or 106.46 points lower at 11,695.24 after swinging between a high of 12181.43 and low of 11501.85 intra-day.

On the other hand, National Stock Exchange's Nifty closed 0.12 per cent or 4.25 points up at 3606.60. The index fell to a low of 3537 from a high of 3732.65.

"The core issue is lack of liquidity and conviction in our market. There is hardly any value buying after the market falls. Unless things change decisively on the overseas front, one cannot be convinced of any upmove," said independent analyst Sumeet Rohra.

Through the volatility, oil & gas shares put up a good show as crude oil prices continued to drop. Most bank stocks surrendered early gains to end weaker. ICICI Bank ended down 1.1 per cent and HDFC Bank fell 6.2 per cent.

Technology companies Infosys, Satyam Computer, Wipro and Tata Consultancy Services fell between 1 and 7 per cent after British bank shares plummeted on funding worries, as the firms count major financial firms amongst their top clients.

Midcaps and smallcaps were relatively more affected. BSE Midcap and Smallcap indices ended down 2 per cent and 2.17 per cent respectively.

Market breadth remained weak. On BSE, 1802 declines outnumbered 809 advances.

Weighing on the indices were Tata Consultancy Services (-7.02%), Larsen & Toubro (-6.94%), Sterlite Industries (-6.35%), HDFC Bank (6.17%) and Mahindra & Mahindra (-5.84%)

NTPC (4.27%), Ranbaxy Laboratories (3.88%), BHEL (3.26%), Bharti Airtel (2.66%) and Reliance Industries (2.04%) posted decent gains.

Asian markets recovered from the day's lows helped by bargain hunting, but investors were jittery on concerns that the fallout from the escalating credit crisis will drag the global economy into recession.

Among European markets, the FTSE was up 1.8 per cent, DAX 30 rose 0.41 per cent and CAC 40 added 1.98 per cent.