Pull back rally not sustainable as Sensex, Nifty turn red

The Indian markets have shed most of the day’s gains and the Sensex is now down 12 points at 16,171. Nifty has fallen 4 points at 4902. European markets like France’s CAC, Germany’s DAX and Britain’s FTSE also opened around 1 percent higher each.

FMCG and realty indices are the top losers with both of them losing more than 0.5 percent each. The top performing indices are IT and public sector units (PSU).

Akzo Nobel India rose 1.5 percent to Rs 877 after the company said its board has approved a buyback of approximately 13 lakh equity shares from the minority shareholders at Rs 920 per share.

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Kalpataru Power Transmission fell 2.5 percent0 Rs 82.75 after consolidated net profit fell 3.31 percent to Rs 204 crore on 22 percent growth in revenue to Rs 5308 crore in the year ended 31 March 2012 over the year ended 31 March 2011.

Bhel rose 3.17 percent, extending Monday’s 2.51 percent rise triggered by the company bagging a contract from NTPC.

Country’s largest private sector lenders ICICI Bank and HDFC Bank were up 0.5-1 percent while top lender State Bank of India turned positive.

Cummins India is the top loser now down 3.6 percent while Tata Power follows closely down 3.2 percent.

Auto stocks like Maruti Suzuki, Hero Motocorp and Bajaj Auto have lost their morning gains after rupee depreciated further as their royalty payments and import costs will increase due to depreciation in rupee.

As the markets showed some buying after continuous sell off, Krishna Kumar Karwa, MD, Emkay Global Financial Services terms this upmove as a pullback rally, which may drive the Nifty by another 100 points. In his view, nothing has changed fundamentally. Therefore, sustenance of the rally is unlikely for a longer period of time.