Markets slump ahead of derivatives expiry

The key benchmark indices ended a fairly choppy session of trade on a depressing note, in a marked departure from enthusing global market cues, due to the rollover pressures ahead of derivatives expiry on Thursday and selling on select heavyweight counters.

The Sensex swung in a range of around 200 points before ending at 19448, lower by 96 points and the Nifty ended at 5833, down 34 points.

There was not much activity on the broader market front though, with the midcap and smallcap indices ending virtually unchanged at 7238 and 8897 respectively.

Given the heartening high-volumes driven intra-day pullback in the previous session, the encouraging rally on Wall Street overnight, the smart movements across the global bourses and a steady morning session, one would have expected our markets to have a good day.

But this was not to be. So while Wall Street ended higher by nearly a percent to set new intraday highs for 2011 and come within kissing distance of three-year peaks, Asian peers such as Nikkei and Taiwan jumped more than a percent each, and CAC and Dax were up in the region of half a percent each, the markets back home stuck a divergent note.

Wipro, which declared its Q4 results prior to market hours, tumbled 2.8% to Rs 450 to emerge as the top loser from the Sensex pack on the back of disappointing guidance and fears of a hit on operating margins.

The company expects revenues from IT services business to be in the range of $1,394 million to $1,422 million.

Meanwhile, the consolidated net profit registered a year-on-year (y-o-y) growth of 14% for the fourth quarter ended March 31, 2011,

powered by the demand from outsourcing services from the clients.

RIL broke the 1000 mark yet again, falling 1.5% at Rs 985, on a possible penalty for falling short of the targeted gas production at its D6 block.

The gas from the block is sold to buyers prioritised by the government.

And banking stocks declined after the RBI imposed penalties on 19 banks for not complying with its instructions on derivatives. ICICI Bank shed 1.2% to Rs 1,107 and SBI was down 0.8% at Rs 2910.

On the other hand, ONGC strengthened by 2.5% at Rs 311, M&M gained 1.6% at Rs 768 and Maruti Suzuki added 1.1% at Rs 1315.

Volatility is likely to remain high on Thursday as it marks the expiry of the current month derivatives series.

Announcement of inflation numbers midway through the session is also expected to trigger a two-way movement on the indices.

The credit policy on (the not-too-distant) Tuesday should also inject some caution on Dalal Street activity.

The market breadth was marginally negative.

Out of 2,987 stocks traded on the BSE, there were 1,317 advances as against 1558 declines.