MOMENTUM LOST

Indian equity markets continued range bound movement, lacking any significant upside triggers in Wednesday afternoon trades. The frontline indices lost some momentum in line with other Asian peers and are trading around the session's lows. Benchmarks tested the psychological 5,000 (Nifty) and 16,500 (Sensex) levels in the session and met with stern resistance around those levels to slip around the 4,900 and 16,400 levels. Investors resorted to largely across the board position squaring a day after witnessing sharp rally. IT bellwether TCS got punished in the session despite announcing quarterly earnings that were in line with street expectations amid speculations that of slowdown in major importing regions like Europe and the US will impact future earnings. However, the reports of index heavyweight Reliance Industries is mulling over share buy-back underpinned the stock by over three percent, giving the much needed support and preventing the downside for the benchmarks. Meanwhile, shares of aviation companies like Jet Airways, Kingfisher and SpiceJet rallied in the range of 5-9% after the government opined that it was considering allowing foreign carriers to take 49 percent stake in Indian airlines. Leads from the Asian peers too remained unexciting as markets in China which rallied over four percent on Tuesday, plunged around one and half a percent in today's session. The European futures too indicated a subdued opening for the markets there as investors seemed to be shifting their focus to Portugal's debt auction and talks in Greece on its debt restructuring. Back home, on the BSE sectoral space, only the Oil & Gas counter managed to stay firmly in the green terrain with over two percent gains. IT index on the other hand did the maximum damage in the session as it plunged by close to two percent.

Moreover, the broader markets traded on a weak note with over half a percent cuts, underperforming their larger peers. The bourses slipped on good volumes of over Rs 0.50 lakh crore. The market breadth on BSE was in favor of declines in the ratio of 1446:1041 while 107 scrips remained unchanged.

The BSE Sensex is currently trading at 16,414.44 down by 51.61 points or 0.31% after trading as high as 16,517.96 and as low as 16,409.99. There were 10 stocks advancing against 20 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap index declined 0.80% and Small cap slipped 0.53%.

On the BSE sectoral space, Oil & Gas up 2.06% was the only gainer while IT down 1.90%, TECk down 1.47%, Metal down 1.38%, Bankex down 1.15% and Auto down 0.95% were the major losers in the space.

RIL up 3.33%, ONGC up 1.70%, Hero Moto up 1.52%, HDFC Bank up 1.24% and Maruti up 0.93% were the major gainers on the Sensex, while M&M down 4.02%, Tata Steel down 2.89%, ICICI Bank down 2.56%, Wipro down 2.34% and TCS down 2.10% were the major losers in the index.

Meanwhile, Indian economy is likely to grow at a subdued pace as per the World Economic Situation and Prospects 2012, a report released by the UN. India's economic growth is estimated to be 7.7% in 2012 and 7.9% in 2013, which is 0.5% lower than its earlier forecast. The revision in the growth rate is mainly on the back of global economic crisis.

The report, however, warned that the downside risks to this outlook have sharply increased in recent months and any failure to deal with sovereign debt problems in Europe and slowdown in United States trigger yet another global recession, India's growth could be lower by another 0.5%.

The UN report said double-dip recession in the US and Europe would have a bearing on economic activity across South Asia, as the two nations are key export markets and the main source of tourism revenues for South Asia. As exports to Europe and the US make up 30% of India's total exports. Exports have been slow lately with trade deficit gap widening to $133-billion during April-December 2011.

On the fiscal deficit, the report said, India is unlikely to reach its fiscal deficit target of 4.6% of gross domestic product (GDP) for 2011-12, as brought down tax revenues and disinvestment in state-owned entities has been put on hold. On the Reserve Bank's monetary stance on inflation and ahead of its third quarterly review of the monetary policy on January 24, the report said, 'the tide has started to turn towards supporting domestic demand' apparently stressing the need for moving towards easy monetary policy.

The report gave a positive outlook for India's job market and said that employment rates were likely to go up. However, it also stated that inflation would decline slowly in the South Asian region, averaging 9.1% in 2012 and 8% in 2013, mainly on the back of easing food and commodity prices, coupled with the impact of monetary tightening in Bangladesh and India.

The S&P CNX Nifty is currently trading at 4,946.15, lower by 21.15 points or 0.43% after trading as high as 4,980.65 and as low as 4,939.95. There were 14 stocks advancing against 36 declines on the index.

The top gainers on the Nifty were Reliance up 3.33%, Hero Moto up 1.66%, ONGC up 1.58%, Maruti up 1.23% and DLF up 1.09%.

M&M down 3.83%, Kotak Bank down 3.20%, Tata Steel down 2.91%, Axis Bank down 2.80% and ICICI Bank down 2.62% were the major losers on the index.

Asian markets were largely trading on a negative note; Shanghai Composite plunged 1.49%, Hang Seng eased 0.03%, Jakarta Composite slipped 0.11%, Straits Times declined 0.27% and Seoul Composite inched down 0.02%.

On the flipside only Nikkei 225 surged 0.99% and Taiwan Weighted added 0.17%.