After a gap-up opening once again, frontline Indian indices once again gave up their gains to end flat. However, the markets had slipped deep into the red before ending flat with the Sensex losing nearly 200 points from the session's peak while the Nifty erased more than 50 points from the day's high.

The fall today could be attributed to the fact that the Index of Industrial Production data for June showed a contraction of 1.8% against the expectation of a marginal increase in production activity.

The data was actually due on Friday but came as a surprise to the markets on Thursday itself.

India's industrial production unexpectedly contracted in the month of June, undermined by dwindling investments in a sharply slowing economy, government data showed today.

Meanwhile, Asian markets ended mostly higher after inflation data from China fell to a 30-month low in July, stoking hopes of further monetary easing by the central bank as it looks to avoid a hard landing amid lingering concern about the ongoing eurozone debt crisis. Hopes of action by other world central banks also aided sentiment.

Equity benchmarks in Japan and Hong Kong rose by ~1% each while that in China was up 0.6%. The Kospi in South Korea was up ~2% while the Taiex in Taiwan advanced 1.5%.

Markets in Singapore and Australia closed lower.

The expectation of easing by central banks post China’s encouraging data also lifted European stocks.

London’s FTSE was tad down 0.1%, France’s CAC was trading down 0.3% and Germany’s DAX was lower by 0.7% ahead of the US jobs report and after a positive start.

BSE Sensex: 17,560 down 0.2%

NSE Nifty: 5,322 down 0.3%

Among the sectoral indices, FMCG was the only index with gains above 1% at 1.4%. It was followed by Metals, Auto, Power and Capital Goods. On the other hand, Oil&Gas was the only index with losses of 1%. It was followed by Teck, Bankex, PSU, Consumer Durables and Realty. IT and Pharma closed nearly unchanged.

Among the broader markets, losses on the BSE Small-Cap index were slightly higher at 0.4%. The BSE Mid-Cap index fared almost in line with the Sensex and ended down 0.26%.

M&M, Sterlite Inds, HUL, Tata Power, Coal India, Sesa Goa, Grasim Inds, IDFC and ITC were the leading gainers on the Sensex and the Nifty.

Bharti Airtel, SBI, HDFC, BPCL, Ranbaxy Labs, Cairn India and Bank of Baroda were the declining stocks on both indices.  

On the BSE-500, HEG, Ess Dee Aluminium, SKS Microfinance, Bajaj Finserv and Apollo Tyres were the top gainers while MVL, Amtek Auto, Aurobindo Pharma, Bharti Airtel, Pantaloon Retail, United Breweries Holdings and Idea Cellular were the top losers.

Abbott India climbed 2% to Rs.1,541.45 after the company’s 2Q net income  spiked 73% on year to Rs.295mn.