Markets end flat on back of losses in banking shares. Sensex opened in the green at 20,038 and touched an high of 20,217-up 179 points, the index pared all the gains and ended at 19,981, down 14 points. The S&P CNX Nifty closed at 5992-down 0.6 points.
European indices were also off to a weak start, CAC-40, FTSE and DAX are all trading marginally in the red. Disappointing U.S. nonfarm payrolls dampened across Asia and Europe.
Analysts said that there is some amount of decoupling between India and the rest of world backed by strong growth momentum, however their outlook on India remains cautious. Rajesh Jain, EVP & Head-Retail Research, Religare Securities said, "India has not been impacted due to its strong economic growth and domestically -funded fiscal deficit. The kind of GDP growth we are seeing, we are in better times. However, the Indian markets could be impacted indirectly as inflows could hurt if crisis further spreads."
Sell-off in Banking shares dragged the bourses lower in the last leg of trade after State Bank of India said that they will raise deposit rates by 50 to 150 basis points from tomorrow, the stock plunged over 4%. Others such as Bank of India also shed 4.2%, Canara Bank dropped 4.7% and Bank of Baroda slumped 4.2%.
Metal stocks continued to shine in trade led by Tata Steel which ended up 3.2% on reports of Rio Tinto, a mining leader buying stake in Riversdale for $3.2 billion.
Tata Steel surged because it holds 21.2% stake in coking coal miner Riversdale. JSW Steel closed up 4.1%, Sterlite gained 3.4% and Jindal Steel advanced 2.3%.
From the Auto, Hero Honda dipped 3.2% after news that Honda will exit its stake in joint venture and will seek approval for the break up from the board of directors this month. Another stock which was in the limelight was Suzlon advanced 1.3% after its board approved a proposal to acquire the business of Suzlon towers and structures and the operations and maintenance unit of Suzlon Infrastructure Services. RPP Infra Projects a construction company made a cold debut, the stock ended at Rs 69 versus the issue price of Rs 75.
Additionally, Oil secretary said that ministerial panel may look into diesel price rise before share sale of IOC and ONGC giving fillip to the oil & gas shares. Gail India rose 1.3%, Cairn India climbed 1.6% and Reliance Industries advanced 1.3%.
Markets have ended flat for two consecutive sessions, analysts recommend buying defensive stocks as market rally is not confirmed. "I think it is not a good time for bottom fishing. We need some more confirmation. At this moment, investors can enter in defensive stocks like FMCG and pharma. The performance of auto industry is also good and investors can consider them in their portfolio."
Besides the metal stocks, Tata Motors, up 3% was the top gainer on the Sensex. JP Associates (up 1.7%), NTPC (up 1.1%) and BHEL (up 1.2%) were the prominent gainers. ICICI Bank and Reliance Communication (down 2.7% each) and ITC (down 1.4%) were the top main losers.
Broader markets have underperformed, the midcap index declined 0.4% and the smallcap index dipped 0.7% versus the benchmark.
Market breadth was negative, for 1701 stocks which advanced, 1222 stocks declined.