Post Session- Sensex snaps losing streak, ends 0.07% higher Analysis for Jan 06, 2012

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Today, the domestic benchmarks closed on a marginally positive note amid a volatile trading session, led by gains in the Oil & Gas and FMCG space.

BSE SENSEX closed at 15867.73 up by 10.65 points or by 0.07 % and then NSE Nifty ended at 4754.1 up by 4.15 points or by 0.09%.The BSE MIDCAP closed at 5259.24 down by 4.93 points or by 0.09%, while the BSE SMLCAP ended at 5704.32 up by 1.1 points or by 0.02%.The BSE Sensex touched intraday high of 16001.31 and intraday low of 15664.91 The NSE Nifty touched intraday high of 4794.9 and intraday low of 4686.85.

The positive closing of the US markets on Thursday failed to make a major impact on domestic sentiment during morning trade. On Thursday, the S&P 500 gained 3.76 points and closed at 1281.06 and the closed at 2669.86, gaining 21.50 points over the previous day"s closing, while the Dow Jones Industrial lost 2.72 points and closed at 12415.7. Soon after witnessing a gap down opening, the domestic benchmarks extended their losses and slumped to the day"s low amid weak cues from the Asian markets. Most of the Asian markets traded on a negative note on Friday amid renewed concerns over the Eurozone debt crises. Borrowing costs for the French government rose at an auction on Thursday, raising concerns that the debt crises is worsening. France sold 10-year bonds at an average yield of 3.29 per cent, compared with 3.18 per cent at an earlier auction held on December 01, 2011. Investors were also cautious ahead of the release of the Eurozone economic confidence and retail sales report on Friday. The domestic benchmarks traded range-bound in the negative terrain during afternoon trade amid weak cues from the Asian markets. However, the benchmarks rebounded back into positive terrain and surged to the day"s high amid positive cues from the European markets. The European markets were trading higher on Friday amid optimism that Friday"s US jobs report may indicate a further recovery in the US labour market. Jobless claims in the US fell by 15,000 to 3,72,000 last week, a report showed on Thursday. However, the recovery in the domestic benchmarks was short-lived as the benchmarks fell below the baseline as investors turned cautious ahead of the release of the quarterly corporate earnings reports next week, with margins expected to remain under pressure amid high borrowing costs, inflationary pressures and global slowdown. The domestic benchmarks hovered around the baseline in the final hour of the trading session amid subdued domestic and global cues. Finally, the benchmarks ended marginally higher, with the BSE Sensex and NSE Nifty gaining over 0.05% each. Among the BSE Sectoral indices, BSE Oil & Gas and BSE FMCG closed up by 1.06% and 0.87%& respectively.

Among the 30 Sensex stocks, RIL, HDFC, Hindalco Industries, Maruti Suzuki and ITC closed higher by 2.52%, 2.25%, and 2.02%, 1.76% and 1.23% respectively. Among the Sensex stocks, there were 14 advances and 16 declines. On BSE out of total shares traded 2890, shares advanced were 1451 while 1326 shares declined and 113 were unchanged.

On the economic front, India"s food inflation fell below zero for the first time in almost six years, raising hopes that the RBI may cut interest rates in the near-term amid easing inflationary pressures. Food inflation fell to -3.36% in the week ended December 24, 2011 from the year ago period.

On the global front, Service sector activity in the world"s largest economy, the US, accelerated in December 2011 as new orders increased, a sign that demand is picking up, said a report by the Institute for Supply and Management (ISM) on Thursday. The ISM Non –Manufacturing index, a gauge of service sector activity in the US, rose to 52.6 in December 2011 from 52 in November 2011.

On the Asian front, Shanghai Composite closed up 0.70%, Hang Seng ended lower by 1.17% and Nikkei 225 closed down 1.16% on Friday.

On the European front, CAC40 was up by 0.58%, DAX was trading higher by 0.02% and FTSE 100 was up 0.16% on Friday.

On the Corporate front, IDBI bank announced on Friday that it has entered into an agreement with rating agency CARE for the utilization of the agency"s ratings for evaluating its current and potential Micro, Small and Medium Enterprises (MSME) clients. The stock of IDBI closed down 0.78% at Rs 83.20 on the BSE on Friday.

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