Markets continue to trade in negative territory amid weak global cues

Indian equity benchmarks continued to trade in red in afternoon session on persistent capital outflows amidst weak global cues after the IMF trimmed its global economic forecast growth forecast. The IMF lowered global growth forecast to 3.3% for 2014 from 3.4% projected earlier. Though most of sectoral indices were trading in positive territory, sharp selling witnessed in defensive sector stocks such as IT, teck and healthcare dragged the major indices down. There was also some cautiousness among the investors ahead of the July-September corporate earnings season, which begins with Infosys on October 10. However, losses remained capped as some support came in from the gains in capital goods and oil and gas stocks. On sector specific, shares of information technology (IT) and pharmaceutical companies are under pressure after the IMF cut its outlook for global growth. On the other hand, public sector banks stocks were in demand as Finance Secretary declared the government's intention to allow Public Sector banks to tap markets to procure funds required for the additional capital under Basel III.

Shares of National Buildings Construction Corporation (NBCC) were trading higher by nearly 2% at Rs after the company said it has received construction order worth of Rs 338 crore from IIT Kanpur. KEC International has gained around 2% to Rs 103 after getting an order of Rs 1,029 crores.

On global front, most of the Asian markets were trading in red with Nikkei 225 down 1.16% and Hang Seng down 0.76%. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 7,900 and 26,500 levels respectively. The market breadth on BSE was positive, out of 2,501 stocks traded, 1,255 stocks advanced, while 1,154 stocks declined on the BSE.

The BSE Sensex is currently trading at 26243.96, down by 28.01 points or 0.11% after trading in a range of 26187.81 and 26334.35. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.05%, while Small cap index up by 0.05%.

The gaining sectoral indices on the BSE were Capital Goods up by 1.60%, Oil & Gas up by 1.25%, PSU up by 1.13%, Realty up by 0.87% and Bankex up by 0.82%. On the other hand, IT down by 2.94%, TECK down by 2.49% and INFRA down by 0.15% were the losing indices on BSE.

The top gainers on the Sensex were BHEL up by 3.11%, Larsen & Toubro up by 2.15%, ONGC up by 1.51%, Tata Steel up by 1.45% and NTPC up by 1.35%. On the flip side, Infosys down by 3.71%, Dr. Reddys Lab down by 3.00%, Wipro down by 2.81%, Sun Pharma down by 2.71% and TCS down by 2.31% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) and Finance Ministry are set to finalise a new monetary policy framework by the end of the year under which the central bank will pursue the retail inflation target to be decided by the government. It is reported that the internal work for the new monetary policy framework is in advanced stages and the government will have to take a final decision on it in consultation with the central bank.

Under the new framework, a separate monetary policy committee will be set up which will set the interest rate with a view to ensure that inflation remains within the targeted levels. The move to set a new monetary policy framework came in after the recommendation of  Urjit Patel Committee which had suggested that the RBI should target to bring down retail inflation to 8 percent by January 2015 and 6 percent by January 2016. Earlier, the government had also expressed the need to have a modern monetary policy framework to meet the challenge of an increasingly complex economy.

Considering price stability an essential condition for economic revival, the RBI has been pursuing hawkish monetary policy stance to keep inflation under check. The central bank has not reduced rates in four consecutive policies in spite of pressure from the government and industry to cut policy rate to boost economic growth.

The CNX Nifty is currently trading at 7850.75, down by 1.65 points or 0.02% after trading in a range of 7826.70 and 7869.90. There were 33 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were BHEL up by 3.42%, BPCL up by 3.36%, DLF up by 2.90%, Indusind Bank up by 2.37% and Larsen & Toubro up by 2.24%. On the flip side, Tech Mahindra down by 4.94%, Infosys down by 3.70%, Dr. Reddys Lab down by 3.04%, Wipro down by 2.95% and Sun Pharma Inds down by 2.69% were the top losers.

Most of the Asian markets were trading in red, Nikkei 225 down 182.94 points or 1.16% to 15,600.89, Hang Seng down 179.13 points or 0.76% to 23,243.39, Taiwan Weighted down 85.63 points or 0.95% to 8,955.18, Jakarta Composite down 52.58 points or 1.04% to 4,980.26, Straits Times down 13.44 points or 0.41% to 3,230.55, KOSPI Index down 7.66 points or 0.39% to 1,965.25. While, Shanghai Composite up by 10.62 points or 0.45% to 2,374.49