Markets surrenders to selling pressure; trades with slender loss

Local equity markets after surrendering to selling pressure was trading with loss of around one tenth of a percent which dragged both Sensex and Nifty below psychologically crucial 29,400 and 8,950 levels respectively. However, broader indices outperforming larger counterparts were trading with gains of around three tenths of a percent. Market pared most of its gains as investors turned cautious ahead of three-day market holiday. The market will remain close on March 6 account of ‘Holi’ followed by weekly holiday of Saturday and Sunday.

On the global front, Asian stocks slipped on Thursday after Wall Street continued to pull back from record highs ahead of Friday's closely-watched U.S. jobs data, while the cautiousness ahead of European Central Bank's policy meeting also weighed on the sentiment. The ECB, which starts its quantitative easing (QE), or bond-buying, program of more than 1 trillion euros this month, is expected to detail the plan after the meeting.

Closer home, most of the sectoral indices on BSE were trading into negative territory, however stocks from FMCG, Auto and Consumer Durable counters were the only gainers of the session which were the preventing further downside of the markets. On the flip side, much of the drubbing was witnessed by stocks from Capital Goods, Metal and Realty counters which were the prominent losers of the session. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1046:958; while 31 shares remained unchanged.

The BSE Sensex is currently trading at 29351.18, down by 29.55 points or 0.10% after trading in a range of 29310.53 and 29496.60. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.43%, while Small cap index up by 0.31%.

The gaining sectoral indices on the BSE were FMCG up by 1.30%, Auto up by 0.33% and Consumer Durables up by 0.03% while, Capital Goods down by 1.25%, Metal down by 1.02%, Realty down by 0.72%, TECK down by 0.51% and PSU down by 0.46% were the losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.40%, Sun Pharma up by 1.91%, Wipro up by 1.40%, Dr. Reddys Lab up by 1.40% and HDFC up by 0.82%. On the flip side, Hindalco down by 2.03%, Larsen & Toubro down by 1.82%, Tata Steel down by 1.61%, TCS down by 1.39% and Bharti Airtel down by 1.34% were the top losers.

Meanwhile, in a major boost to India's sovereign outlook, global rating agency Moody's underscored that the new 'inflation targeting' mechanism is a 'credit positive' development and it would make RBI's monetary policy tools much more effective. According to the agency, inflation targeting is forward looking as this would encourage a focus on future, rather than past, price trends.

Moody's underscored that quantitative inflation targeting would foster transparency and predictability in monetary policy, as capital market participants, businesses and the public understand the drivers of central bank actions and hence has termed this move as “credit positive”. Additionally, it emphasized that increase in monetary policy transparency and effectiveness would just lessen volatility in international capital flows into India and support institutional strengthening via accountability. Moody's, while cautioning that unchecked inflation would have a greater chance of hurting growth, added that inflation between 2011 and 2014 inflation was largely driven by food and commodity prices but it ultimately compromised growth.

However, as per the present monetary policy framework agreement between the RBI and the Government, RBI will target to lower inflation to below 6 per cent by January 2016 and further to 4 per cent with a band of (+/-) 2% in 2016-17. According to Prime Minister, Narendra Modi that the new mechanism would increase the predictability and effectiveness of RBI's monetary policy, while the effectiveness of its monetary tools would increase because 'inflation targeting' would take into account future -- rather than past-- price trends.

The CNX Nifty is currently trading at 8901.55, down by 21.10 points or 0.24% after trading in a range of 8891.15 and 8949.05. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 2.59%, Sun Pharma up by 2.03%, Lupin up by 1.85%, Dr. Reddys Lab up by 1.38% and Wipro up by 1.32%. On the flip side, Ultratech Cement down by 4.12%, NMDC down by 2.83%, ACC down by 2.56%, Grasim Industries down by 2.13% and Hindalco down by 2.12% were the top losers.

Asian markets were trading mostly lower; with KOSPI Index trading higher by 0.09 points or 0% to 1,998.38; Jakarta Composite trading higher by 24.19 points or 0.44% to 5,472.25 and Nikkei 225 trading higher by 48.24 points or 0.26% to 18,751.84. On the flip side, Hang Seng trading lower by 305.16 points or 1.25% to 24,160.22; Shanghai Composite trading lower by 37.55 points or 1.14% to 3,241.99; Taiwan Weighted trading lower by 26.64 points or 0.28% to 9,595.09; FTSE Bursa Malaysia KLCI trading lower by 19.74 points or 1.08% to 1,805.80 and Straits Times trading lower by 13.1 points or 0.38% to 3,402.43.