Benchmarks continue to trade in red in late morning session

After getting a gap-down start, benchmarks continued to trade on a subdued note in late morning session on heavy selling by funds and retail investors due to weak industrial production data. Besides, a weak trend on other Asian bourses coupled with the depreciation in rupee value against the dollar too influenced the sentiment. However, some support came in from reports that foreign institutional investors (FIIs) bought shares worth a net Rs 182.80 crore on September 12, 2014.  Among macro economic data, India's industrial output growth hit a four-month low in July when it grew at much slower-than-expected 0.5 percent year-on-year. Besides, Retail inflation has edged down marginally to 7.8 percent in August from 7.96 percent a month earlier.

On the BSE sectoral front, barring Consumer Durables and Healthcare indices, all the other indices were trading in the negative territory. Metal was the biggest loser down over 1.25% followed by Capital Goods, FMCG, Realty and Oil & Gas indices down between 0.5-1%. In scrip specific development, Shares of Fortis Healthcare have surged as much as 10% after the company decided to divest entire stake in healthcare service provider RadLink-Asia and its arm RadLink Singapore to Medi-Rad Associates for SGD 137 million. Besides, Bajaj Electricals rose after the company said it has bagged two orders worth Rs 518.46 crore. On the other hand, shares of Yes Bank have dipped as much as 3% after the Reserve Bank of India on Friday said the foreign investors will need the central bank's approval to buy additional equity in the private sector lender.

On global front, Asian stocks stumbled to their lowest in five weeks after a batch of weak data out of China raised the spectre of a sharp slowdown in the world's second-biggest economy. Besides, US stocks edged lower on Friday, as investors looked ahead to a Federal Reserve meeting due on September 16, 2014. Back home, Indian rupee depreciated by 32 paise to 60.97 against the US dollar in early trade due to increased demand for the US currency from importers amid a weak opening in the domestic equity markets.

The market breadth on BSE was positive, out of 2495 stocks traded, 1275 stocks advanced, while 1148 stocks declined on the BSE.

The BSE Sensex is currently trading at 26847.73 down by 213.31 points or 0.79% after trading in a range of 26998.07 and 26813.02. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.25%, while Small cap index up by 0.17%.

The losing sectoral indices on the BSE were Metal down by 1.30%, Capital Goods down by 0.88%, FMCG down by 0.73%, Oil & Gas down by 0.70% and Realty down by 0.63%, while Consumer Durables up by 0.40% and Healthcare up by 0.21 % were the only gaining indices on BSE.

The top gainers on the Sensex were Cipla up by 2.27%, HDFC Bank up by 0.89%, Dr Reddys Lab up by 0.79% and Hero MotoCorp up by 0.59%. On the flip side, Hindalco down by 2.91%, GAIL India down by 2.37%, Tata Steel down by 1.92%, HDFC down by 1.76% and Mahindra & Mahindra down by 1.42% were the top losers.

Meanwhile, Much in line with expectations, provisional annual inflation rate based on all India general Consumer Price Index (CPI) (Combined) eased to 7.80% in August as compared to 7.96% in July and 9.52% in the August, 2013, aided by slower annual increases in prices of fuel and light. CPI numbers of the month of August 2014 for Rural, Urban and Combined stood at 146.7, 143.0 and 145.1, respectively. The corresponding provisional inflation rates for rural and urban areas for the month under review stood at 8.35% and 7.04% as compared to 8.37% and 7.42% respectively in the previous month. 

However, food inflation during the month under review rose to 9.42% over 9.36% in July and 11.11% in August, 2013. The newly introduced Consumer Food Price Indices (CFPI) for rural, urban and combined stood at 152.0, 152.3 and 152.1 respectively for August 2014.

The inflation in August rose mainly due to the rate of price rise in food items, which have 37.15% weight in the CPI. Inflation of food and beverages (combined) receded to 9.16% as against 9.36% in July. Besides, Fuel and light prices also ebbed to 4.15% in August on a yearly basis, against 4.47% in July, however inflation in clothing, bedding and footwear grew to 8.53% in month under review against 7.31% in July.

In yet another encouraging development, CPI core stood at 6.89%, which is its first reading below 7%. With declining global commodity prices and a stable rupee, the core inflation was expected to see a decline as this may offset some demand led pressures on prices.

Overall, though the Retail inflation figures were much in line with expectation, disappointment came in from dismal July IIP numbers, the combined effect of which may prompt RBI to go for a prolonged pause on interest. However, weak domestic demand and dovishness of central banks across the globe may hold back RBI from raising policy rates despite the structurally high food inflation.

The CNX Nifty is currently trading at 8,044.00 down by 61.50 points or 0.76% after trading in a range of 8,077.30 and 8,030.00. There were 14 stocks advancing against 36 declining on the index.

The top gainers on Nifty were Cipla up by 2.09%, United Spirits up by 1.42%, Lupin up by 1.00%, NMDC up by 0.93% and Dr Reddys Lab up by 0.88%. On the flip side, Hindalco down by 2.85%, GAIL India down by 2.51%, Jindal Steel & Power down by 2.20%, HDFC down by 1.88% and Tata Steel down by 1.70% were the top losers.

Asian markets were trading in the red; Straits Times contracted 0.22%, KOSPI Index dipped by 0.21%, Jakarta Composite decreased by 0.24%, Shanghai Composite declined by r 0.49%, FTSE Bursa Malaysia KLCI slipped by 0.47%, Hang Seng dropped by 0.84% and Taiwan Weighted was down by 0.21%.