Nifty must hold above today’s low to reach 5,000

The sell-off that started in noon trade following the political impasse over foreign direct investment in multi-brand retail led the market lower today. The Nifty made a higher low and barely made a higher high and ended in the red. The index must hold itself above today’s low for further gains up to the level of 5,000. However, if it breaches 4,765, we may see the index moving sideways for the time being. The volume on the National Stock Exchange was 57.14 crore shares.

The market opened higher tracking the firming trend in the global arena. US stocks closed in the green overnight, ending their seven-day decline, on hopes that European leaders would come up with some solutions to solve the continent’s debt problems. The optimism also led the Asian pack higher in morning trade. Back home the Nifty added 13 points to its previous day’s tally to open trade at 4,864 and the Sensex started the day at 16,210, up 47 points.

Profit booking led the indices lower in the initial hour. However, buying in select stocks saw an upward movement in the indices, with the market emerging into the positive in the pre-noon session. The indices touched their day’s high around noon with the Nifty rising to 4,866 and the Sensex scaling 16,210.

But the gains were temporary as the benchmarks once again drifted lower amid choppy trade. The benchmarks fell to the day’s lows in the post-noon session as political developments made investors nervous. At the lows, the Nifty fell to 4,787 and the Sensex went back to 15,953.

Making a half-hearted recovery at the close, the indices managed to hold on to their psychological levels. The Nifty closed 46 points down at 4,805 and the Sensex settled 159 points lower at 16,008.

Markets in Asia closed with gains of over 1%-2% on optimism that European policymakers will chalk out a plan to contain the debt crisis. Finance ministers from the 17-member European Union are meeting in Brussels today to work out details on how the European Financial Stability Facility will boost its muscle by insuring sovereign debt with guarantees.

The Shanghai Composite gained 1.23%; the Hang Seng rose 1.21%; the Jakarta Composite climbed 1.12%; the KLSE Composite advanced 0.92%; the Nikkei 225 surged 2.30%; the Seoul Composite jumped 2.27% and the Taiwan Weighted closed 1.30% up. Bucking the trend, the Straits Times lost 0.23%.

Back home, foreign institutional investors were net sellers of stocks totalling Rs302.59 crore on Monday. On the other hand, domestic institutional investors were net buyers of shares aggregating Rs307.30 crore.