Sensex sheds 97 pts at close, but pares losses on short-covering in auto shares

Bulls and bears slugged it out in late trades, but bears finally emerged winners after ceding ground in last two sessions even as benchmark Sensex sniffed victory towards the fag-end before going down to a late bout of selective selling pressure.

After after having dropped more than 400 points in the first hour of the start of trading session, equity markets lingered in negative territory for better part before reversing the tide to gain a meagre 14 points in the last few minutes of the trade.

Weak economic data from China and Japan were the key reasons that created uncertainty among investors. Of late, investors are taking a measured approach over the past few months amid recurring worries over the weakening global economic scenario.

In tandem with the weak Asian markets trend, the 30-share BSE S&P Sensex ended the session at 25,622.17, down 97.41 points, or 0.4 percent from previous close. In the previous two sessions, the index had surged more than 840 points on robust global markets-led rally.

The broader 50-stock CNX Nifty also managed to curb losses and ended 30.50 points lower or 0.4 percent at 7,788.10.

The market breadth ended weak with 1,484 stocks declining against 1,111 advances on BSE.

Elsewhere in Asia, key Chinese stock indices ended weak with Hang Seng ending 2.6 percent lower and Shanghai Composite falling 1.4 percent. The Japanese Nikkei shed 2.5 percent at close after having surged 7.7 percent a day before, its biggest single-day percentage rise since October 2008.

Japan’s key gauge of capital spending unexpectedly fell for a second straight month in July, signalling that the economy is struggling to get back on track after contracting in the second quarter, a Reuters report said.

Amid lingering worries about sluggish global growth, latest Chinese economic data further added fuel to fire after its August consumer inflation edged up, but falling producer prices reignited concerns that the world’s second-largest economy is facing greater risk of deflation.

However, Adrian Mowat, chief Asian and emerging market equity strategist at JPMorgan, in an interview with CNBC-TV18, said China is far from being in recession and cited strong auto and home sales that rose 8 percent and 20 percent this year. As far as India is concerned, he does not think it will fall as much as other emerging markets.

Separately, the Reserve Bank of New Zealand taking a more proactive step announced a 25 basis points cut in benchmark rate to 2.75 percent and indicated further rate cut measures if Chinese economy continues its downward trend.

Back home, local commodity shares faced the heat tracking sluggish Chinese economic data. Shares of Hindalco, which led the fall in Sensex pack, declined 2.6 percent to Rs 76.55, ONGC eased 1.7 percent to Rs 226.65 and Gail fell 1.2 percent to Rs 290.35.

Other losers such as HDFC, SBI, Wipro, Dr Reddy’s, Lupin, Hindustan Unilever, NTPC and Bharti Airtel were down around 1-2 percent each.

However, gains in frontline automobile shares helped the index curtail losses. Shares of Tata Motors rose 2.7 percent to Rs 354.25, Bajaj Auto gained 1.5 percent to Rs 2,302.45, M&M added 0.6 percent to Rs 1,178 and Maruti ended marginally higher at Rs 4,301.55.

Other than select frontline stocks, investors also lapped up several mid-cap shares, with BSE Mid-cap index ending 0.6 percent higher.