Sensex, Nifty end in red after a volatile trade

Markets finished flat amid a choppy trading session because of weakness in metal stocks.

Weak Chinese factory data and disappointing quarterly results posted by Tata Steel were the triggering factors.

Also, earning numbers of blue-chips, including ITC and SBI due on Friday, contributed to the decline.

However, a stellar rally in the auto stocks led by Bajaj Auto limited losses on the bourses.

The Sensex dropped 28 points to end at 27,809 and the Nifty shed 2 points to close at 8,421 mark.

MARKET VIEW

“The last two days, Nifty has remained in the range of 70 points, just. This is after two consecutive weeks of extreme volatility.

Momentum seems to be fading for the bulls in the last 2 days, however, the earlier resistance of 8350 is now a good support for Nifty (spot).

It’s been an interesting week in terms of markets internals, as in the first half of the week we saw quite a few midcaps picking up pace, and the second half we witnessing good quality large caps participating even when the Mid cap index closed negative.

I believe that this range of 8350-8450 is the key for the near term.

If we breakout of either band, I would expect a quick 100-120 point move on the index with a slight increase in volatility,” said Kunal Bothra, Head – Advisory of LKP Securities.

KEY EVENTS

Chinese factory activity contracted for the third month in May and output shrank at the fastest rate in just over a year, a private survey showed, indicating persistent weakness in the world's second-largest economy that requires increased policy support.

The flash HSBC/Markit Purchasing Managers' Index fell to 49.1 in May, below the 50-point level that separates growth in activity from a contraction on a monthly basis.

The finance ministry yesterday constituted a three-member committee headed Justice A.P. Shah to look into the issue of Minimum Alternate Tax (MAT) on foreign institutional investors.

RUPEE

The rupee is trading at 63.68 against the US dollar on continued dollar selling by banks and exporters amid firm domestic equity market.

KEY STOCKS

On the sectoral front, BSE Power, FMCG, Oil & Gas indices lost sheen and were down between 0.5-1%. On the other hand, BSE Capital Goods, Realty and Auto indices ended higher up to 1%.

Tata Steel slumped over 5% after reporting a consolidated net loss of Rs 5,674 crore in the quarter ended March 2015 (Q4) due to a sharp decline in revenues and an exceptional loss of Rs 4,811 crore.

Vedanta slipped by 3%. Rating agency Moody's today said that Vedanta will have to strengthen its balance sheet in FY16 to avoid further pressure on its ratings.

ITC and SBI lost 1.6% and 0.7% on caution ahead of their earnings tomorrow.

Shares of Bajaj Auto surged over 7.4% although the company reported a 18.6% year-on-year decline in net profit at Rs 622 crore for the fourth quarter ended March 2015 (Q4) on higher other expenditure and employee benefit costs.

Mahindra & Mahindra and Tokyo-based Mitsubishi Heavy Industries (MHI) today entered into a strategic partnership for agricultural machinery. The stock ended the session with marginal losses.

The environment ministry has given Coal India the go-ahead to expand the Jhanjra underground mining project in West Bengal, one of the few such proposals in recent years, which will help the state monopoly extract coal worth more than Rs 8,000 crore without destroying forests, according to media reports. Coal India is up around 3.5%.

Shares of IT stocks including Infosys and TCS ended with marginal losses on the back of an appreciating rupee.

However, Wipro gained 0.2%. Wipro has been felicitated by Microsoft with 'Supplier of the Year award' for demonstrating excellence across multiple disciplines.

Shares of engineering major L&T moved higher 1.4% and BHEL inched up after Nitin Gadkari, the Union minister of road transport, highways and shipping announced that government is planning Rs 3lakh Cr projects in 6 months.

In the energy space, ONGC and its partner Cairn India are willing to spend somewhere between $750million-$1billion in their Nagayalanka block located in KG Basin. ONGC gained 0.6% and Cairn India ended with marginal gains.

In the broader markets, BSE Smallcap index ended with marginal losses whereas BSE Midcap index underperformed the peers and slipped by 0.4%.

The market breadth ended weak on the BSE with 1,183 shares advancing versus 1,507 shares declining.