RALLY HALTED

After showcasing an awe-inspiring performance in the previous session, Indian frontline equity indices slipped lower in Tuesday's session and registered its first negative close in last six sessions. The benchmarks failed to extend five session gaining momentum as investors lacked conviction to take larger bets after the recent sharp rally in equities. Sluggish global cues have kept domestic market participants cautious leading the frontline indices to move in a tight range for most part of the day. Meanwhile, government data showed India's gross domestic product (GDP) growth for the fiscal year 2011-2012 would be 6.9% which is a tad less than the widely expected figure of around 7%. The psychological 17,800 (Sensex) and 5,400 (Nifty) levels proved as stern resistances as the key gauges witnessed hefty bouts of profit booking at higher levels which dragged the indices below the neutral line. Profit booking was largely evident in the Capital Goods and high beta - Realty counters which plunged over two percent after registering solid gains in the recent past. Furthermore, gains in Oil & Gas and Banking bellwethers did their bit in preventing the downside for the markets. Stocks from Aviation pocket including Kingfisher Airlines, Jet Airways and Spice Jet skyrocketed in the range of 10-15% in the session after the empowered group of ministers gave their green signal to the decision to allow airlines to directly import Air Turbine Fuel from abroad. Telecom stocks edged lower after telecom regulator indicated that it may have to intervene if telecom operators decide to increase tariffs. On the earnings front, auto major M&M announced results for the third quarter which were below street's expectations and got pounded by about 3%.

On the global front, Asian markets exhibited mixed trends while the European stock futures traded on somber note after both French President and German Chancellor cautioned Greece that it was running out of time to reach a consensus on the bailout loan package aimed at preventing the euro zone member nation from defaulting on its debts.

Earlier on Dalal Street, the benchmark got off to an encouraging opening tracking the leads from Asian markets. Thereafter, the bourses traded on a positive note and climbed to the highest point in the session in mid morning trades. However, the indices witnessed some stern resistance around key technical levels and got pushed closer to the neutral line. However, the pessimistic leads from European markets in the mid noon trades spooked sentiments and dragged the frontline indices to the lowest levels in the session. Eventually the markets closed with moderate cuts and snapped the five session uptrend. The NSE's 50-share broadly followed index Nifty, slipped around half a percent to settle below the crucial 5,350 support level while Bombay Stock Exchange's Sensitive Index or Sensex shed little under a hundred points and ended above the psychological 17,600 mark. Moreover, the optimism in broader markets petered out completely by the end as they settled on a weak note, in tandem with their larger peers. On the BSE sectoral space, Oil & Gas counter remained top gainer in the space with gains of about a percent while the Consumer Durables and Bankex sectors finished with over half a percent gains. On the flipside, Capital Goods counter along with the Realty index languished at the bottom of the table, being the top laggards. The markets climbed on strong volumes of over Rs 1.44 lakh core while the turnover for NSE F&O segment remained on the higher side as compared to that on Monday at over Rs 1.19 lakh crore. The market breadth turned pessimistic by the end as there were 1247 shares on the gaining side against 1630 shares on the losing side while 119 shares remained unchanged.

Finally, the BSE Sensex lost 84.86 points or 0.48% to settle at 17,622.45, while the S&P CNX Nifty declined by 26.50 points or 0.49% to close at 5,335.15.

The BSE Sensex touched a high and a low of 17,832.04 and 17,582.49 respectively. The BSE Mid cap and Small cap indices were down by 0.81% and 0.44% respectively.

The major gainers on the Sensex were Reliance up 1.44%, ITC up 1.38%, ONGC up 1.25%, ICICI Bank up 0.98% and TCS up 0.63%. While, BHEL down 4.22%, Tata Steel down 3.30%, Mahindra & Mahindra down 2.88%, Gail India down 2.70% and DLF down 2.66%, were the major losers on the index.

The top gainers on the BSE sectoral space were Oil & Gas up 0.88%, Consumer Durables (CD) up 0.61%, Bankex up 0.56% and Fast Moving Cosumer Goods (FMCG) up 0.28%, while Capital Goods (CG) down 2.29%, Realty down 2.10%, Power down 1.98%, Metal down 1.77% and TECk down 1.21% was the only loser on the sectoral space.

Meanwhile, the group of ministers (GoM), headed by the Finance minister, has cleared the proposal to allow Indian carriers to import fuel directly. The panel of ministers has also approved a debt restructuring plan for state-run carrier Air India. The panel was also apprised on the issue of FDI in domestic airlines by international carriers.

The airline industry, off late has been under severe financial stress and demanded that it be allowed to import aviation turbine fuel directly rather than buying it domestically.  Currently Indian carriers buy jet fuel from state run corporations and have to pay a hefty sales tax to state governments. Since jet fuel accounts 40 to 50% of an airline's total operational cost, savings in this area can bring down costs substantially. Average tax on jet fuel in India is 24%, which is second highest in the world second only to Bangladesh at 27%.

The GoM has also approved a debt restructuring plan for state-run carrier Air India. It has recommended issuance of bonds with sovereign guarantee worth Rs 7,400 crore for Air India. The bond is likely to carry a coupon rate of 8.5-9% and financial institutions may subscribe to these bonds. A final decision is expected after the matter is approved by the Cabinet Committee on Economic Affairs.

The panel was also apprised about the issue of FDI in domestic airlines and the aviation ministry is likely to move a note to the cabinet to allow foreign airlines to buy stakes of up to 49% in Indian carriers. Currently foreign investment of up to 49% is permitted in the aviation sector, apart from 100 % in MRO (maintenance, repair and overhaul), airports, helicopter and sea-plane operations, but foreign carriers are not allowed to invest.

The S&P CNX Nifty touched a high and low of 5,413.35 and 5,322.95 respectively.

The top gainers on the Nifty were Kotak Bank up 2.63%, Cairn up 2.45%, ITC up 1.51%, Reliance up 1.47% and Ranbaxy up 1.40%.

On the flip side, BHEL down 4.64%, JP Associates down 4.32%, Tata Steel down 3.76%, RCOM down 3.34% and M&M down 3.27% were the top losers on the index.

The European markets were trading in red as France's CAC 40 was down 0.31%, Britain's FTSE 100 down 0.23% and Germany's DAX down by 0.48%.

Asian stock markets snapped the day's trade mostly lower on Tuesday as talks dragged on to resolve a massive debt mess in Greece before it explodes into a wider financial crises. Officials in Greece struggled to make headway on austerity measures which are crucial for obtaining the next installment of the bailout package for the debt-strapped country, with Prime Minister Lucas Papademos and other political leaders delaying a key meeting on reforms demanded by the country's creditors. Meanwhile, Chinese shares declined over one and half a percent with the Shanghai Composite Index breaking below 2,300 after hopes of a cut in bank reserve requirements were doused.