The country?s equity indices erased all the gains it made during the early session to end the day flat following weak cues from the European markets. During the early trading session, domestic markets were up sharply cheering the news of reconciliation between the Ambani brothers.
The 30-share Sensex of Bombay Stock Exchange (BSE) added 23.94 points to close the day at 16,469.55, while the broader S&P CNX Nifty of National Stock Exchange (NSE) gained 12.80 points to end the day at 4,943.95.
Earlier during the trading session, Sensex had gained over 300 points following positive cues from the Asian markets. But then the European markets played spoilsport. Dealers in the markets say, European stocks and US index futures dropped while copper and oil retreated on concern that the turmoil from Europe’s debt crisis has further to run. Government bonds rose and the euro snapped three days of gains.
“While the support declared by European leaders and the International Monetary Fund quelled concerns of sovereign risk spreading, Greece’s ability to refinance near-term debt remains a risk,” said John Wilson, head of the Australian unit of Newport Beach, California-based Pimco. “Other developed countries in this ‘ring of fire’ are Ireland, Spain, France, US, UK, Italy, Portugal and Japan.”
Among the Asian markets, Nikkei 225 was down by 0.27% closing the day at 9,758.40 its lowest in last 5 months as investors remained wary about taking on more risky assets without assurance that a recent stock slide is over. Hong Kong and China stocks closed with marginal gains.
Ajay Parmar, research head at Emkay Share and Stock brokers said, “Though it is difficult to predict the markets for the short-term, markets are likely to remain volatile in the coming days. With markets closing with minimal gains after witnessing a rise of over 300 points during the day it shows the markets are under-pressure.”
Market participants say that continuous selling from the FII in the last few days will have negative impact. “If this kind of non-stop selling continues then it will be big concern for the markets,” added Parmar.
In May, foreign institutional investors (FIIs) have been net sellers to the tune of over $1.67 billion. On Monday, the FIIs sold stocks over Rs 1,000 crore while domestic institutional investors (DII) were net buyers at Rs 1,100 crore in the market.