Nifty ends mildly lower ahead of F&O expiry; Italy crisis, Moody's GDP forecast weigh

Benchmark indices ended the session mildly lower after volatility on Wednesday, as political turmoil in Italy and Moody's GDP growth forecast cut weighed on market sentiment. Investors also closely monitor the movement in the rupee and crude oil prices, both of which are range-bound after recent sharp moves.

The 30-share BSE Sensex fell more than 200 points intraday but managed to recoup losses in last hour of trade to close slightly lower, down 43.13 points to 34,906.11.

The 50-share NSE Nifty managed to hold 10,600 levels, falling 18.90 points to 10,614.40 ahead of expiry of May futures & options contracts on Thursday.

Jayant Manglik, President, Religare Broking believes that the upward movement of crude oil prices could increasingly face challenges on the back of continued rise in US oil production and the recent measures by Saudi Arabia and Russia to counter potential shortfalls in oil supply. This will put a reign on the depreciating rupee also, he said.

The Indian rupee recovered sharply, rising 43 paise to 67.43 against the US dollar due to sustained bouts of dollar-selling from banks and exporters.

Mangalik said with corporate earnings witnessing traction, as evident from the March quarter earnings season, the current market valuation multiples should broadly sustain.

Globally investors worried over Eurozone break-up risk due to political turmoil in Italy. Asian markets closed lower, tracking the overnight correction in US and European markets. China's Shanghai Composite, Japan's Nikkei, Hong Kong's Hang Seng and South Korea's Kospi ended down 1-2.5 percent.

European markets were mixed, with the Germany's DAX rising half a percent while France's CAC fell half a percent.

"Italy’s political paroxysms have sent jitters across most asset classes including equity, bonds, currencies as well as commodities,” Gaurang Somaiya, Analyst - Currencies, Motilal Oswal Commodities told Moneycontrol.

“This uncertainty has caused fears amongst market participants raised and questions that ‘Will Italy stay in the Euro bloc?’ Stocks across the globe fell following fear that escalating crisis in Italy could deepen further," he said.

Brent crude oil futures gained half a percent at $75.78 a barrel amid worries over rising output from Saudi Arabia and Russia.

Meanwhile, rating agency Moody's reduced its India 2018 growth forecast to 7.3 percent from 7.5 percent but retained 2019 GDP growth estimates at 7.5 percent. "India's transition to new GST regime could weigh on growth in the next few quarters."

Mahindra & Mahindra was the biggest gainer among Nifty50 stocks, rising 3 percent as brokerage houses upped target prices after strong Q4 earnings. Credit Suisse has maintained Outperform rating on the stock with increased target price to Rs 1,030 (from Rs 970) as the stock traded at attractive valuation of less than 13x core FY20 EPS.

Coal India gained 2 percent and Power Grid was up over a percent after March quarter earnings while ONGC ended down 0.88 percent and SAIL gained 1.5 percent ahead of Q4 earnings later in the day.

ICICI Bank was the biggest contributor to Nifty's losses, falling 1.7 percent. In the ICICI Bank-Videocon loan case, the bank has called for an independent enquiry to examine the merit of the complaint against its CEO Chanda Kochhar on alleged “conflict of interest” while giving loans to the corporate group.

HDFC, L&T, ITC, Maruti Suzuki, Tata Motors, IOC, HPCL and Axis Bank were down up to 2.6 percent while HDFC Bank, Bajaj Finance, Kotak Mahindra Bank, Yes Bank, SBI, Bajaj Finserv and Tech Mahindra gained up to 2 percent.

Satin Creditcare rallied 10 percent after the company posted consolidated profit at Rs 44 crore for March quarter against loss of Rs 43 crore in year-ago period while Nava Bharat Ventures surged 17 percent as consolidated profit in Q4 jumped nearly 8-fold to Rs 173.5 crore QoQ.