A smart pull back in a difficult global environment. That sort of sums up today's trade. Asia was down and out today; China was down more than 7%. Most of Asian markets were down between 3-5%.
We fell in line almost immediately from the word go this morning. Within minutes of trade we were down 800-900 points on the Sensex, fearing on 17,500. The Nifty collapsed to sub-5,100. It looked like we were setting ourselves up for another really bad day, and then came the recovery.
Europe didn't do too much when it opened later in the afternoon. Most of those markets were down 1.5% but we didn't look back. Led by the rate sensitives, the Sensex rallied 700 points to the day's low and close to 200 points for the Nifty. The Sensex finally closed the day above 18,000. The Nifty shut shop at 5,275. So, good rear guard action today, even the midcaps did very well.
The breadth improved and we finally closed at about 400 advances to 800 declines. It is not the worse advance-decline ratio that we have seen over the last one-week. The volumes were pathetic, just about Rs 60,000 crore. With three days to go for settlement, it is as low as you can expect. So, people haven't returned to the market.
With the Sensex, Nifty, and stocks moving all over the place, volumes are a clear reflection that a lot of investors are still down and out Though the Midcap Index still managed to close up at 0.5%, led by the interest rate sensitive, ahead of tomorrow's Credit Policy, there is an expectation that RBI will move on the rate front and may be cut the repo rate.
We don't know for sure but the banks were building up open interest. Most banks led by HDFC, SBI, PNB, and more liquid ones like Vijaya Bank, Syndicate Bank, Indian Bank, and even private banks like Yes Bank and DCB rallied quite a bit.
It was a similar case with the other rate sensitives like auto. Tata Motors, M&M, Bajaj Auto among others among others did pretty okay today, not as much as the banks, but they did well. The only other rate sensitive, which got left out, was real estate. They are still licking their horns. Stocks like DLF, Unitech etc were quite unable to pull back from their lows and some stocks like HDIL also did pretty badly.
Among other largecap names, Reliance Energy and GAIL didn’t look too bad. But metals are still suffering. Stocks like SAIL, Nalco etc looked weak. VSNL, whose results were out today, and Dr Reddy’s, whose results were out yesterday, looked pretty weak, because their results were not very good. Technology had a fairly ordinary session.
From the rate sensitives, some individual stocks that stood out today were Gujrat NRE Coke which was the star of the piece today. Other stocks like Jindal Steel, Voltas, Zee News, Marico, Power Grid, and GHCL after the news of the de-merger, looked good in today’s trade
IDBI and Essar Oil were the stocks which looked smart on the way down. Sugar didn’t look good; Balrampur Chini was down. Many of the liquid names like IFCI, TTML, Adlabs, Neyville Lignite, and fertilizer stocks didn’t look very strong. It was a mixed bag for the midcap set.
It has to be said that the markets did stage a good recovery and the bulls will probably take more out of today’s session than the bears, though the market seems still rangebound between 5,000 and 5,500 for the Nifty. Tomorrow is a day of reckoning. Will RBI return the faith of interest rate sensitives? We will find out.
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