Markets settle in the red, slips 55.02 points

Mumbai, May 7: The Sensex today slipped by a nominal 55.02 points to settle in the red on the Bombay Stock Exchange (BSE) at 13,879.25 due to heavy selling by investors.

After opening above the psycological barrier of 14,000 at 14,044.71, it had surged to a high of 14,067.07 and a low of 13,861.38 during intra-day trade.

Among the broader markets, the 50-stock Nifty Index also closed in the red losing 6.20 points on the National Stock Exchange (NSE) at 4,111.15 from its previous close of 4,117.35 points.

''The Sensex was extremely volatile throughout the day, as the bulls and bears locked horns, with the latter eventually emerging victorious. The benchmark has over the past few days found it difficult to stay abreast of the 14,000 milestone. Despite a strong show in the first half, it lost its way in the second half. Heavy selling brought about the downfall,'' market analysts said.

The total turnover on BSE amounted to Rs 4474 crore. The market-breadth, which reflects the health of the market, turned negative on BSE as selling emerged for small and mid-cap stocks.

Here, 1,395 shares declined while 1,194 advanced and 61 stocks remained unchanged. Among the 30-Sensex pack, 22 declined while the rest advanced.

Experts pointed out that the two key events to watch out this week, are the outcome of elections in Uttar Pradesh (UP) and the outcome of US Federal Reserve's meeting day after tomorrow.

Though no one expects a rate hike, investors are keenly awaiting the central bank's latest assessment of the world's biggest economy, analysts opined.

Meanwhile, the government has proposed to remove loopholes in foreign direct investment (FDI) norms that allow foreigners to own stakes in Indian companies higher than the sectoral caps. The new guidelines, however, will not affect the existing foreign investments. The proposed change is to bring assorted forms of indirect foreign holding under the FDI cap, as well as to clearly define the contours of indirect holding.

At the moment, there are four distinct FDI slabs, ranging from 100 per cent to a complete bar in some sectors. The telecom sector has a 74 per cent sectoral cap, the aviation sector has a 49 per cent sectoral cap, and the cap for the insurance sector stands at 40 per cent, analysts said.

Information technology (IT) major Wipro was the top-loser, down 2.36 per cent to Rs 554, on a volume of 1.16 lakh shares. Satyam Computers was down 2.15 per cent to Rs 460.50 and Infosys Technologies was down 1.70 per cent to Rs 2,037.

IT shares slipped following a rise in the Rupee to a fresh nine-year high against the dollar today, as the market tested how far the Central Bank would let it appreciate before intervening. By 0914 hours, the partially convertible Rupee was at 40.54/50 per US dollar, its highest level since May 1998. It is also stronger than last week's close of 40.8450/8600, traders revealed.

The Rupee's surge is a cause of concern for IT firms, as it directly impacts their revenue and profits, a lion's share of which is accounted for by exports, analysts explained.

Dr Reddy's was down 2 per cent to Rs 705), Hindalco was down 2.29 per cent to Rs 144.75 and Cipla was down 1.60 per cent to Rs 214.

On the other hand, Ranbaxy laboratories was the top-gainer, up 2.11 per cent to Rs 390, on a volume of 3.12 lakh shares.

Index heavyweight Reliance Industries (RIL) advanced 1.48 per cent to Rs 1606, as 9.67 lakh shares changed hands on BSE. The scrip fluctuated in a range of Rs 1,617.80 to Rs 1,593.

Hero Honda was up 1.02 per cent to Rs 704.90), Bharti Airtel was up 0.64 per cent to Rs 823 and ACC was up 0.46 per cent to Rs 863.

The Nikkei share average rose 1.58 per cent, its highest close in more than three weeks, with technology shares such as Canon Inc., advancing following gains in their US peers and helped by a softer yen. The Nikkei was up 274.91 points at 17,669.83, its highest close since 11 Apr 2007.

The Hang Seng was up 55.56 points (0.27 per cent), to 20,896.64.

US stocks climbed last week, lifted by talk of potential takeovers and after the influential non-farm payrolls data showed the world's biggest economy posted its slimmest gain in jobs in more than two years for April, helping ease inflation concerns. The Dow rose 23.24 points (0.18 points), to a record close of 13,264.62. The tech-laden Nasdaq Composite Index added 6.69 points (0.26 per cent), to end at 2,572.15.

Meanwhile, oil prices retreated below USD 62 a barrel in Asian trading today following a sharp fall late last week on continued expectations of weak crude demand. Light, sweet crude for June delivery dropped 26 cents to USD 61.67 a barrel in electronic trading on the New York Mercantile Exchange midmorning in Singapore.

UNI