Markets ended a choppy session of trade on a flat note as auto shares weighed offseting gains in capital goods and consumer durable stocks.
The S&P CNX Nifty was confined to a narrow 42 points range during the day. The Nifty opened flat on back of nervousness across the Asian bourses; but gains across Europe lifted Indian markets to a high of 5540 in the noon session.
However, the Nifty was unable to hold on to gains and closed flat at 5521, down 6 points after weekly inflation accelerated to 9%. The benchmark Sensex ended at 18,385, down 9 points.
India's food inflation picked up to 9.1% from a year earlier for the week ended May 28, higher than 8.55% recorded the previous week, raising concerns of further monetary tightening. Prime Minister's economic advisor Kaushik Basu said that petroleum product prices need to be hiked in order to maintain the FY12 fiscal deficit target and also said that Inflation for March 2012 would be 6.5% weighed on investor sentiment.
Nifty was trading in a 5400-5640 range for the past few sessions, Ashish Chaturmohta, Vice President - Derivatives & Technical Analyst from IIFL Wealth said that the direction for the market would be judged only if this range was broken.
Analysts recommend investors to remain on the sidelines until any clarity emerges on market direction.
Asian peers also ended in the red as risk appetite for equities waned on concerns of a global slow down after Ben Bernanke said that US recovery was lagging. Japan's Nikkei Stock Average fell 0.3%, South Korea's Kospi Composite lost 0.2%, Hong Kong's Hang Seng Index declined 1%, and China's Shanghai Composite fell 0.6%.
Among the sectoral pack, BSE auto index was the top sectoral loser, down 0.6% after car sales clocked the slowest growth in 2 years, up only 7%
Tata Motors closed at Rs 1020, down 0.7% after dropping to nine month low of Rs 1014 on reports that the spread on the company's credit default swaps were widening in the past one month, indicating worsening investor perception about the company's ability to service its debt.
Maruti Suzuki was also down 0.7% as workers strike at Haryana plant entered 5th day causing a revenue loss of Rs 400 crore a day according to various news reports. Among other stocks, Hero Honda slipped 1.3%.
Buying was seen in capital goods stocks ahead of the industrial output data tomorrow. Reuters poll expects April industrial output growth at 5.55% versus a year earlier. Larsen & Tourbo advanced 1.3%, BHEL gained 0.9% and Suzlon was up 1.1%.
BSE Consumer Durables index was the top gainer, up 1% on expectations of normal monsoon which would boost demand for consumer goods. Top gainers were Bajaj Electricals, up 2.8%, Titan Industries advanced 2.6% and Rajesh Exports gained 1%.
From the broader market place, the midcap and the smallcap indices ended flat.
Top losers on the Sensex were JP Associates, down 2%, ONGC slipped 1.8% and State Bank of India dipped 1.3%. NTPC was the top gainer, up 1.7%, L&T advanced 1.3% and BHEL was up 0.9%.
The market breadth was slightly in the negative. Out of the total 2927 total stocks traded on the BSE, 1388 stocks have advanced, while 1402 stocks declined.
