Failing to recoup the damage that was done during early afternoon trading, the indices closed in the red during the first day of the week. While the BSE Sensex edged lower by around 120 points (down 0.7%), NSE Nifty shed around 45 points (down 0.8%). Weakness was also seen amongst BSE Midcap and Smallcap indices as they were weaker by around 0.7% and 0.8%. On the Sensex, losers outnumbered gainers by a ratio of 3:1. Metal counters came in for some significant profit booking today.
Asian indices closed mixed today while similar trend is also being witnessed amongst European indices currently. The rupee was trading at Rs 46.6 to the dollar at the time of writing.
Today's decline comes on the back of a pretty strong week for the Indian markets where the Sensex gained nearly 3%. It also takes the Sensex once again below the 17,000 mark, a level, which now looks like a very difficult mountain for the Sensex to comfortably go past. Every time it has tried to scale the summit and stay there for a sustained period of time, it has been pulled back. Investors would have thought that last week's reports on the country's robust GDP growth and strong auto numbers would finally take the Sensex comfortably past the 17,000 mark, but the way things have panned out so far, that does not seem to be the case.
Perhaps, the markets need even bigger trigger than that. Furthermore, the Dubai episode seems to have made investors a little cautious and hence, the possibility that a strong wave of liquidity, by way of increased FII flows, could take the Sensex past 17,000 may have reduced to a significant extent. This is not a reflection of the fact that all stocks have started looking expensive. Although the number may have diminished, there are still some counters out there that look attractive on the risk-reward framework from a medium to long term perspective. The investor may just have to cast his net a little wider.
Wind energy equipment maker Suzlon was one among the few gainers on the Nifty today. Infact, the company emerged as the highest gainer. The optimism towards the counter was the result of news that the company's 91% subsidiary REpower has signed an agreement with US based enXco to supply 70 turbines for a wind farm project by 2011. Infact, Suzlon has won a spate of orders in recent times and it couldn't have come at a better time for the company as it battles some pretty severe cash flow problems. Interestingly, in order to tide over the same, the company sold off a 35% stake in another of its subsidiary Hansen Transmission, last month and had raised a total of US$ 370 m. Thus, it is orders such as these that will ensure that the company does not have to resort to stake dilution in key subsidiaries.