Mumbai, Dec 1 Lack of major triggers coupled with uncertainty over the upcoming US rate hike subdued the Indian equity markets as a barometer index traded flat during the mid-afternoon session on Tuesday.
Initially, both the bellwether indices of the Indian equity markets opened on a positive note following Monday's late night reforms initiated by the finance ministry in accordance with market regulator and the Reserve Bank of India (RBI).
Even a modest growth in the gross domestic product (GDP) for the second quarter, which showed a gradual recovery in the country's economy, cheered the markets.
However, the gains were capped after a slowdown in demand was indicated by a lackluster eight core industries (ECI) and purchasing managers index (PMI) data.
Nevertheless, investors kept an optimistic outlook with the RBI announcing that it will maintain an accommodative stand on future rate cuts and that the economy is eventually limping towards a marked recovery.
The barometer sensitive index (Sensex) of the S&P Bombay Stock Exchange (BSE) rose by 18 points during the mid-afternoon trade session.
The wider 50-scrip Nifty of the National Stock Exchange (NSE) also made modest gains. It was higher by 17.10 points or 0.22 percent at 7,952.35 points.
The Sensex of the BSE, which opened at 26,201.27 points, was trading at 26,163.87 points (at 2.15 p.m.), up 18.20 points or 0.07 percent from the previous day's close at 26,145.67 points.
The Sensex so far has touched a high of 26,246.02 points and a low of 26,121.52 points in the intra-day trade.
Analysts elaborated that the markets traded in a narrow range with a positive bias as investors looked for further cues, especially from parliament on key reforms.
"Last night's reforms and modest rise in the second quarter GDP data gave an initial boost to the markets, but the momentum was deflated due to concerns over a demand slowdown as indicated by ECI and PMI data," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
"Further positive bias emanated out of expectations of a stimulus package being announced for EU."
Investors are hopeful that the European Central Bank (ECB) will announce a stimulus package during its next monetary policy meet slated for December 3, after latest data showed that Germany's GDP growth has slowed.
Vaibhav Agarwal, vice president and research head at Angel Broking, said that the monetary policy remained a non-event, as it came on expected lines with no changes announced in key lending rates.
"We expect investors to monitor the developments on the GST front and any success towards its implementation would be a key driver for markets. The US rate hike decision continues to add to the uncertainty in the markets," Agarwal said.
Nitasha Shankar, vice president for research with YES Securities, said that the market volumes continue to remain thin triggering a range bound movement on the headline indices.
"Broader markets, however, continue to outperform. All major sectors are trading in the green at the moment, barring the Auto Index, which came under pressure post disappointing auto sales numbers. Metal, pharma, FMCG and energy stocks are witnessing smart gains," she said.
