Nifty may seek support at 5,175 but the trend is down unless the market closes above any previous day and strengthens further

The huge sell-off in the second half of trade after the key European markets opened lower and a depreciation of the rupee to a fresh two-month low resulted in an extremely negative close, wiping out all the gains of yesterday and some more. In our yesterday’s closing report we had mentioned that if the Nifty manages to make a higher high, we may see it reaching 5,460. Today the index made a high above yesterday’s high but couldn’t sustain that level for long and went to make a new low in the past 10 trading days (including today). The market record its second highest fall in 2012 after 27 February 2012 where the Sensex had ended 478 lower and the Nifty was down 148 points. From here we may see the benchmark seeking minor support at 5,175. The National stock Exchange (NSE) saw a much higher volume of 91.50 crore shares, which was above its 10-day moving average.

The market witnessed a small gap-down opening as a report indicating lower factory output in China for the month of March saw the Asian pack trading mixed. Profit booking after two days of gains also weighed on the sentiments. The Nifty opened four points lower at 5,361 and the Sensex started the day at 17,586, a cut of 16 points over its previous close.

After remaining in the red till around 10.00am, select buying pushed the indices into the positive. The upmove enabled the benchmarks to hit their intraday highs a short while later. At the highs, the Nifty touched 5,386 and the Sensex rose to 17,687.

The rupee lost 10 paise to touch a new two-month low of 50.77 against the dollar on the Interbank Foreign Exchange market in early trade, following increased demand for the American currency from importers.

However, profit booking at higher levels led the indices lower again amid choppy trade. Moving sideways in the negative terrain till around 1.30pm, a lower opening of the key European markets and US stock futures trending lower led to a huge sell-off following which the local market fell sharply lower in post-noon trade.

The slide continued with the indices falling to their intra-day lows in the last half hour. At the lows, the Nifty went down to 5,206 and the Sensex dropped to 17,137. The market closed a tad above those levels. The Nifty declined 137 points (2.54%) to settle at 5,228 and the Sensex tumbled 405 points (2.30%) to finish at 17,196.

The advance-decline ratio on the NSE was negative at 387:1326.

The broader indices were equally punished in today’s decline, as the BSE Mid-cap index tanked 2.27% and the BSE Small-cap index dropped 1.68%.

While yesterday all sectoral indices settled higher, it was the opposite today. BSE Realty (down 4.25%); BSE Power (down 3.62%); BSE Bankex (down 3.41%); BSE Capital Goods (down 3.37%) and BSE Metal (down 3.29%) were the top losers.

Coal India (up 2.40%) and Hero MotoCorp (up 0.48%) were the only gainers on the Sensex. The losers were led by Jindal Steel (down 7.26%); DLF (down 5.01%); Tata Steel (down 4.55%); Tata Power (down 4.42%) and Reliance Industries (down 4.15%).

The Nifty gainers were Coal India (up 2.07%) and Hero MotoCorp (up 0.57%). The main losers on the index were Jaiprakash Associates (down 7.18%); Jindal Steel (down 7.15%); Reliance Power (down 6.56%); Reliance Infrastructure (down 6.53%) and IDFC (down 6.03%).

The preliminary reading of China’s factory output for March, which was lower for the fifth month in a row, was offset by Japan’s higher-than-expected trade surplus for February. Referring to the development, an analyst at Nomura Securities opined that the “recovery in exports would be sustainable. However, in view of the contrasting news from the region, the Asian pack settled mixed for yet another day.

The Hang Seng gained 0.22%; the Jakarta Composite rose 0.13%; the KLSE Composite added 0.04%; the Nikkei 225 climbed 0.40% and the Taiwan Weighted surged 0.98%. On the other hand, the Shanghai Composite lost 0.10%; the Straits Times declined 0.88% and the Seoul Composite fell by 0.05%. At the time of writing, the key European indices were down between 1.11% and 1.82% and the US stocks futures were in the red.

Back home, foreign institutional investors were net buyers of equities totalling Rs622.64 crore on Wednesday and domestic institutional investors were net sellers of shares amounting to Rs293.70 crore.

Line pipe maker Welspun Corp today said it has bagged pipes and plates orders worth Rs1,217 crore from national and international markets. With the addition of these orders, the current order book of the company stands at Rs6,241 crore. The stock plunged 7.55% to close at Rs135.30 on the NSE.

In a move to address shortage of liquefied natural gas (LNG) supply, state-run Indian Oil Corporation (IOC) today signed an agreement with the Tamil Nadu Industrial Development Corporation for setting up a Rs 4,500-crore LNG terminal near Chennai. The project would initially have a capacity of about 5 million tonnes may be scaled up to 10 million tonnes whenever there is an increase in demand. IOC declined 1.92% to settle at Rs265.50 on the NSE.

Thermax has acquired the steam division of Virgo Valves and Controls, India and its German subsidiary company—Rifox-Hans Richter Gmbh, a leading steam traps and allied steam accessories manufacture, for a value of Rs13.39 crore. The acquisition will bring to the Thermax fold the manufacturing facilities of Rifox-Virgo in Germany and in India. The stock slipped 0.42% to Rs485 on the NSE.