Benchmarks reverse gears; slip into negative territory

Reversing gears, Indian equity markets have now slipped into negative territory on persistent profit-booking by funds and retail investors at the higher levels. Sentiment on the street weakened on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 671.06 crore on October 13, 2014. Some mild weakness also came after the Supreme Court ruled that iron ore mined before 2007 in Goa belongs to the State. According to the apex court, unsold pre-2007 mined iron ore lying in Goa belongs to State. The court has ordered pre-2007 iron ore to be auctioned by a monitoring panel. Besides, heavyweight like DLF, which tumbled up to 25% after the Securities and Exchange Board of India (Sebi) banned the company and six executive from accessing the capital markets for three years, is also the culprit for drop in market. However, losses remained capped as the retail inflation dropped to 6.46 per cent in September on falling prices of fruits and vegetables, the lowest since India started computing Consumer Price Index (CPI) in January 2012.

On the sectoral front, stocks from Bankex, Capital Goods and Infrastructure counters were supporting the markets’ uptrend, while those from Realty, Metal and information technology (IT) counters were adding to the underlying cautious undertone. In scrip specific development, UPL rose after the Reserve Bank of India allowed foreign investors to invest up to 74% in the company. Besides, shares of Jay Bharat Maruti have gained after the company reported a net profit of Rs.12.25 crore for the September quarter as compared with Rs. 7.54 crore a year ago.

On global front, Asian shares were trading higher despite US stocks posting their third straight decline as investors awaited earnings and fretted about signs of slowing global growth. Back home, Indian rupee strengthened past the 61 mark against the US dollar after inflation eased for the second month, prompting hopes that the Reserve Bank of India will cut rates sooner than expected.

The market breadth on BSE was positive, out of 2165 stocks traded, 1191 stocks advanced, while 885 stocks declined on the BSE. The BSE Sensex is currently trading at 26351.00 down by 33.07 points or 0.13% after trading in a range of 26550.79 and 26325.39. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.13%, while Small cap index was up by 0.41%.

The gaining sectoral indices on the BSE were Bankex up by 0.43%, Capital Goods up by 0.39%, Infrastructure up by 0.17%, Power up by 0.12% and Oil & Gas up by 0.11%, while Realty down by 7.39%, Metal down by 1.04%, IT down by 0.65%, FMCG down by 0.45% and Consumer Durables down by 0.43% were the losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 2.89%, BHEL up by 2.75%, SBI up by 1.64%, Bharti Airtel up by 1.39% and Cipla up by 1.34%. On the flip side, Tata Steel down by 1.97%, Tata Motors down by 1.65%, Sesa Sterlite down by 1.40%, ITC down by 1.24% and Hindalco down by 1.13% were the top losers.

Meanwhile, In an extremely encouraging development, India’s consumer price inflation eased at an all time low level since the launch of the new series of Consumer Price Index in 2012, at 6.46% in September as compared to 7.80% in August, helped by the lower prices of food and fuel. The numbers were way lower than street expectation of a figure above ‘7%’. Also, the August CPI inflation has been revised to 7.73% from 7.80%. The General Indices for rural, urban and combined stood at 147.0, 142.5 and 145.0, respectively. The corresponding provisional inflation rates for rural and urban areas for the month under review stood at 6.68% and 6.34% as compared to 8.27% and 7.04% respectively in the previous month.

Retail Inflation for the month under review declined mainly on account of food inflation, which eased down to 7.67% against 9.42% month-on-month. The vegetable price inflation lowered significantly to 8.59% versus 15.15% from August. 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.

Inflation of food and beverages (combined), with 59.31% weigtage of the index, receded to 7.56% as against 9.16% in August. Besides, Fuel and light prices, with 10.42% weightage in the index ebbed to 3.45% in September on a yearly basis, against 4.15% in August, additionally, inflation in clothing, bedding and footwear eased to 7.59% in month under review against 8.53% in August.

This reading works well towards RBI’s target of bringing the inflation lower to 8% mark by January 2015 and to 6% by January 2016.  However, rates cuts are unlikely for the near term by RBI, which gauges both measures of inflation when deciding on monetary policy. This also looks unlikely since RBI, in its fourth bi-monthly monetary policy stance and rationale, expressed upside risk to its target to bring consumer inflation down to 6% by January 2016, which continued to warrant policy preparedness to contain pressures if the risks materialized.

The CNX Nifty is currently trading at 7,860.70 down by 23.55 points or 0.30% after trading in a range of 7,928.00 and 7,860.05. There were 25 stocks advancing against 25 declining on the index.

The top gainers on Nifty were Bajaj Auto up by 2.82%, BHEL up by 2.54%, Indusind Bank up by 2.11%, Bharti Airtel up by 1.44% and Cipla up by 1.42%. On the flip side, DLF down by 24.81%, NMDC down by 2.38%, Tata Steel down by 2.23%, Jindal Steel & Power down by 2.11% and Tata Motors down by 1.76% were the top losers.

Asian markets trade mostly in the green; Hang Seng surged 0.65%, KOSPI Index increased by 0.19%, Straits Times spurted by 0.23%, Jakarta Composite added 0.30%, Shanghai Composite gained 0.02%, FTSE Bursa Malaysia KLCI improved 0.06% and Taiwan Weighted was up by 0.35%. On the flip side, Nikkei 225 was down by 1.84%.