RTTNews - The Indian market may continue its downward trend on the back of weak global cues. Frontline stocks could see some further profit taking as they are trading at 18 times to their one- year forward earnings estimates. With market breadth and turnover improving significantly in the past 2-3 sessions, second-line stocks are likely to extend their gains. The market may trade range- bound on alternate bouts of buying and selling. Traders look forward to inflation data scheduled to be released later in the day.

Foreign institutional investors sold shares worth Rs.985.53 crore on a net basis on Wednesday, while domestic financial institutions bought shares worth Rs.4.99 crore, according to the provisional data released by the Bombay Stock Exchange. Data available with market regulator SEBI showed that FIIs made a net investment of Rs.5, 044.80 crore in Indian equities on Tuesday.

Currently, markets across the Asia-Pacific region are trading in the red. China's Shanghai Composite index is down 1.13%, Hong Kong's Hang Seng index is losing 1.27%, Japan's Nikkei 225 index is down 1.17% and South Korea's KOSPI is edging down 1.42%.

On Wall Street, stocks failed to sustain the early gains and ended modestly lower on Wednesday with several participants choosing to stay away from the market after recent gains. The U.S. treasury secretary, while sounding optimistic regarding the recovery of the much-battered financial sector, said a full recovery would take time. The Nasdaq Composite ended down 0.39%, the Dow Jones Industrial Average shed 0.62% and the S&P 500 index moved down 0.51%.

The Indian ADRs ended mixed. Infosys fell 2.45%, Satyam declined 0.44%, Wipro drifted down 0.72%, ICICI Bank lost 2.77% and HDFC Bank shed 1.63%, but Strelite rose 1.52%, MTNL gained 3.2% and Reddy's Laboratories added 3.95%.

Crude oil settled at a fresh six-month high of $62.04 a barrel in New York trading on Wednesday, spurred by a second straight decline in weekly inventories. Crude oil inventories fell by 2.1 million barrels in the week ended May 15. Experts had forecast a decline of about 1.5 million barrels of crude oil.

The rupee closed stronger at Rs.47.47/48, up 31 paise on Wednesday, boosted by improved outlook for stocks and consistent buying by foreign funds.

The Indian market fell sharply on Wednesday, as investors choose to take profits amid concerns about stretched valuations in a tough economic environment. Even as overvalued frontline stocks came under significant selling pressure, the broader market, represented by small-caps and mid-caps, ended with handsome gains. The mid-cap index rallied 6.03% and the small-cap index jumped 8.86%. Trading was largely sector-specific as investors shuffled their portfolios. The BSE Sensex closed at 14,061, down 241 points or 1.69% from the previous close and the S&P CNX fell 48 points or 1.11% to 4,270. On the BSE, the market breadth was extremely positive, with advancers outnumbering decliners by 2389 to 300.

Stocks to Watch

Reliance Industries may be in focus on reports that it has got an approval from the petroleum ministry to execute gas sale agreements with around half-a-dozen city gas distribution firms in Delhi, Mumbai, Ahmedabad, Gandhinagar, Agra, Indore and Ujjain.

Bharat Forge may see some activity after the company reported a sharp 68% decline in its consolidated net profit for the 3 months ended March. MTNL may move after its striking employees called off a two-day long strike on contentious pay revision issues.

Punjab National Bank could be in focus after its board decided to divest a 26% stake in the bank's housing arm, PNB Housing Finance. The board also decided to set up a joint venture for factoring services.

Tata Motors could be in the spotlight after it raised Rs.4200 crore through an issue of secured non-convertible rupee debentures. Unitech could move on reports that it has sold its prime office complex at Saket in South Delhi for Rs.500 crore to a high net worth individual.

Pharmaceutical companies such as Aventis, Pfizer, GlaxoSmithKline may come under selling pressure amid reports that the Drug Controller General of India (DCGI) has recommended cancer drugs to be brought under the National Pharmaceutical Pricing Authority

'Navrathnas' in the public sector such as GAIL, NTPC, ONGC, BHEL, SAIL and Indian Oil Corporation may see some activity on reports that the government is considering a proposal to upgrade status of these companies to 'Maha Navratnas.'

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