MUMBAI: The Indian markets took a breather after three consecutive sessions of gains as modest profit booking at higher levels and weak global cues weighed on the bourses. While the overall trend remained choppy, a sudden bout of selling during mid-day trade tripped up the market though buying in select heavyweights offset the losses by the end of the day. Notably it was the buying demand in telecom and select banking shares that aided some recovery from the day's low.
Realty stocks once again led the gains amongst the sectoral indices while selling pressure was visible in IT, oil & gas and auto stocks. During the penultimate hour, selling pressure was visible at higher levels in some of the realty counters. The stocks in this space thus remain 'sell on rise' candidates notwithstanding the service tax related clarification.
Meanwhile, as the markets continue to flirt with higher index levels, defensive sector stocks continue to hog the limelight along with continued buying activity in the mid-cap and small-cap space. Traction in select healthcare, FMCG and consumer durables stocks during the day's trade also indicates the growing apprehension among market participants to aggressively bet on heavyweights that have already made a sharp upmove.
The current rally also seems to be fuelled by the FIIs which is also visible in the appreciation of the rupee that hit a six-week high of 45.82 against the dollar. However, investors may turn cautious even as Greece's fiscal position has thus far not severely impacted the global financial markets, on account of growing hopes that Europe will bailout the debt-burdened Greece.
The choppiness in the Indian markets today can be also attributed to the interest rate decision by the European Central Bank which has left them unchanged. Further, investors back home are likely to turn cautious over taking home aggressive long positions over the weekend as Friday's key payroll report could set the tone for the US markets.
For now, the bulls have the upper hand and the rally does not seem to have weakened. This is also suggested by the sudden surge in buying momentum close to the final hour of trade that helped the Indian benchmarks offset their losses. However, from a technical perspective, for the markets to sustain at higher levels, some consolidation around these levels could be useful.
