Markets make a lower start ahead of RBI's policy announcement

Markets after making a lower start were trading cautiously on Tuesday morning. Traders were waiting for RBI’s policy announcements later in the day to take further direction. Although, the general expectation is that central bank will maintain status-quo on key policy rates but some dovish statement may come from the RBI governor and help the markets to regain momentum. Traders seems to have largely overlooked the report that growth of eight core industries rose to 6.3 percent in October on the back of a strong production of coal, crude oil and petroleum products putting the cumulative growth during April-October, 2014-15 at 4.3 percent. The eight core sectors have a combined weight of about 38 percent in the Index of Industrial Production, indicating a better show of the IIP later in the month. The PSU oil marketing companies are in somber mood as the international crude prices bounced back overnight after plunging to their near 5 years low in last session. Meanwhile, the decline in international oil rates has reduced losses on sale of subsidised LPG and kerosene by 21 percent to Rs 148 crore per day.

The BSE Sensex is currently trading at 28453.28, down by 106.34 points or 0.37% after trading in a range of 28446.64 and 28541.96. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index and the Small cap index, both were trading down by 0.06%.

The gaining sectoral indices on the BSE were Capital Goods up by 0.27%, FMCG up by 0.18%, Oil & Gas up by 0.18%, Power up by 0.10%, Metal up by 0.09% while, Auto down by 0.90%, IT down by 0.84%, Consumer Durables down by 0.69%, TECK down by 0.64%, Bankex down by 0.58% were the losing indices on BSE.

The top gainers on the Sensex were Sesa Sterlite up by 1.12%, ONGC up by 1.11%, Bharti Airtel up by 0.86%, NTPC up by 0.71% and BHEL up by 0.57%. On the flip side, Bajaj Auto down by 1.81%, Infosys down by 1.50%, Mahindra & Mahindra down by 1.17%, Wipro down by 1.13% and Hero MotoCorp down by 1.06% were the top losers.

Meanwhile, fuelling recovery hopes in Asia’s third-largest economy, business activity in Indian manufacturing sector expanded in the month of July on the back of solid inflow of new orders which have driven the manufacturing firms to scaled up production. The HSBC Manufacturing Purchasing Managers’ Index (PMI), a headline index designed to measure the overall health of the manufacturing sector, jumped to 21-month high at 53.3 in the month of November from 51.6 in the previous month’ October. The latest reading signaled a solid improvement in business conditions and remained above the crucial 50 mark for the thirteen consecutive months that separates growth from contraction. However, a cautionary note was provided as the survey indicated that inflationary pressures intensified in November suggesting that RBI should remain vigilant about lowering interest rates.

The Survey further highlighted stronger-than expected demand, as new order growth accelerated to the quickest in 21 months. New export orders also continued to grow in November, although the pace slightly faltered from October. Among the monitored sub-sectors, consumer goods remained best performing sector. Manufacturers reported that stronger order books and higher production requirements fuelled further expansions in purchasing activity and pre-production inventories in October. Subsequently, stocks of inputs expanded for the sixth month running, and post-production inventories also rose during the month albeit marginally. Despite accelerated expansions in output and new business, employment in the Indian manufacturing, economy remained broadly unchanged in November.

On inflation front, the HSBC survey indicated high inflationary pressure as manufactures paid higher prices for metals, chemicals and energy. Among the surveyed sub-sectors, the sharpest increase in purchases' prices was witnessed in intermediate goods and accordingly, manufacturers also increased their output prices. The rate of charge inflation picked up to the quickest in five months, suggesting that inflation may increase in coming months.

The CNX Nifty is currently trading at 8528.65, down by 27.25 points or 0.32% after trading in a range of 8528.65 and 8548.35. There were 22 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Cairn India up by 1.85%, Jindal Steel & Power up by 1.44%, Sesa Sterlite up by 1.24%, NMDC up by 1.19% and ONGC up by 1.00%. On the flip side, BPCL down by 2.71%, Asian Paints down by 2.23%, Bajaj Auto down by 1.79%, Infosys down by 1.40% and Wipro down by 1.11% were the top losers.

Asian markets have turned mostly in green after a sluggish start, Nikkei 225 increased 12.34 points or 0.07% to 17,602.44, Shanghai Composite was up by 18.99 points or 0.71% to 2,699.14, Jakarta Composite gained 27.01 points or 0.52% to 5,191.29, Straits Times was higher by 27.44 points or 0.83% to 3,333.08, Hang Seng gained 81.79 points or 0.35% to 23,449.24. On the other hand, Taiwan Weighted was down by 81.58 points or 0.89% to 9,036.13, FTSE Bursa Malaysia KLCI lost 9.94 points or 0.56% to 1,768.33 and KOSPI Index decreased by 3.66 points or 0.19% to 1,961.56.