Markets slip into red again, dragged down by CG and realty stocks

Markets continue to show a choppy trade in the noon session and have once again slipped into red with benchmark indices witnessing cut of around a quarter percent. Though, the broader indices are still holding the gains but the profits taking in some high beta bluechip stocks have led the major bourses lower. Traders seems to have ignored the global rating agency Moody’s statement that the new ‘inflation targeting’ mechanism is a “credit positive” move and it would make RBI’s monetary policy tools much more effective. Moody’s has said that since inflation targeting is forward looking, it would encourage a focus on future, rather than past, price trends.  Back on street, rupee recovery, snapping its four days falling streak too was unable to support the markets. Rupee had slumped in last session after RBI Governor Raghuram Rajan said that an excessively strong rupee is undesirable as it triggers disinflationary pressures. On the sectoral front capital goods, realty and metals were dragging the markets lower, while the defensive FMCG and healthcare stocks were giving some support to the markets.

The BSE Sensex is currently trading at 29343.04, down by 37.69 points or 0.13% after trading in a range of 29310.53 and 29496.60. There were 13 stocks advancing against 17 stocks declining on the index.

The broader indices were outperforming the benchmarks; the BSE Mid cap index was up by 0.36%, while Small cap index gained 0.29%.

The top gaining sectoral indices on the BSE were FMCG up by 1.19%, Consumer Durables up by 0.19%, Auto up by 0.08%, while Capital Goods down by 1.07%, Realty down by 0.78%, Metal down by 0.73%, TECK down by 0.42%, PSU down by 0.40% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.60%, Wipro up by 1.68%, Sun Pharma Inds up by 1.61%, Dr. Reddys Lab up by 1.32% and Cipla up by 0.72%. On the flip side, Hindalco down by 2.19%, Larsen & Toubro down by 1.64%, Tata Steel down by 1.52%, TCS down by 1.52% and ICICI Bank down by 1.16% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) after announcing a surprise rate cut outside the policy review cycle, has cautioned that the uncertainty surrounding global oil prices can have an adverse bearing on the inflation outlook, though it will endeavour to bring it down to the target of 4 percent by 2016-17.

The RBI and the government had last month entered into an agreement to lower inflation to below 6 percent by January 2016 and further to around 4 percent by March next year. The central bank will be deemed to have missed its target if consumer inflation remains above the 6 per cent level for three consecutive quarters during 2015-16 or if it remains below 2 per cent for three consecutive quarters during the year 2016-17. In case of a failure, RBI will have to specify the reasons.

The RBI Governor Raghuram Rajan, has though stated that, 'The RBI will seek to bring inflation rate to the mid-point of the band of 4 percent, (+/-) 2 percent provided for in the agreement, i.e., to 4 percent by the end of a two year period starting fiscal year 2016-17'. For other risk to inflation, RBI said, emanate from any possible spill over of volatility from international financial markets. RBI is of the opinion that softer readings on inflation are expected to come in through the first half of 2015-16 before firming up to below 6% in the second half.

The CNX Nifty is currently trading at 8905.10, down by 17.55 points or 0.20% after trading in a range of 8891.15 and 8949.05. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 2.75%, Lupin up by 2.17%, Sun Pharma Inds up by 1.49%, Wipro up by 1.43% and Dr. Reddys Lab up by 1.25%. On the flip side, Ultratech Cement down by 4.14%, NMDC down by 2.45%, Cairn India down by 2.31%, Hindalco down by 2.29% and ACC down by 2.19% were the top losers.

The Asian markets were showing a mixed trend KOSPI Index was tad higher by 0.09 points to 1,998.38, Jakarta Composite gained 27.91 points or 0.51% to 5,475.97 and Nikkei 225 added 48.24 points or 0.26% to 18,751.84.

On the other hand, Hang Seng plunged by 267.93 points or 1.1% to 24,197.45, Shanghai Composite lost 56.89 points or 1.73% to 3,222.64, Taiwan Weighted was down by 26.64 points or 0.28% to 9,595.09,  FTSE Bursa Malaysia KLCI declined by 16.18 points or 0.89% to 1,809.36 and Straits Times was down by 9.12 points or 0.27% to 3,406.41.