Benchmarks trade lower tailing feeble global cues

Indian equity benchmarks have made a awful start and are trading with a cut of over a percent with key gauges declining below their crucial 29,100 (Sensex) and 8,850 (Nifty) levels on feeble global cues. Traders also remained cautious with an Assocham’s post-Budget survey of CEOs and CFOs, where majority of them have said that they find revised GDP data of over 7 percent growth as “too good to be realistic” and too optimistic since the underlying situation is not all that upbeat.

On the global front, the US markets ended lower in last session on concern that Fed may increase the interest rate earlier than expected following the release of upbeat US employment data. The Asian markets were trading all in red at this point of time tailing the weakness in US markets. Japanese market was lower as the nation’s revised fourth-quarter gross domestic product rose less than estimated, while the  Chinese market was down despite its Exports gaining more than 48 percent from a year earlier in February.

Back home, on the sectoral front, healthcare remained the lone gainer in trade, while banking, software and technology remained the top losers on the BSE. The broader indices too were reeling under pressure, while the market breadth on the BSE was negative; there were 708 shares on the gaining side against 1,259 shares on the losing side while 87 shares remain unchanged.

The BSE Sensex is currently trading at 29074.74, down by 374.21 points or 1.27% after trading in a range of 29024.91 and 29321.06. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.71%, while Small cap index down by 0.54%.

The lone gaining sectoral indices on the BSE was, Healthcare up by 0.74%, while Bankex down by 1.94%, IT down by 1.65%, TECK down by 1.52%, Power down by 1.52% and Infrastructure down by 1.32% were the top losers on the sectoral index.

The top gainers on the Sensex were Dr. Reddys Lab up by 1.78%, Hindustan Unilever up by 1.63%, Coal India up by 0.82% and Reliance Industries up by 0.05%. On the flip side, Sesa Sterlite down by 3.52%, GAIL India down by 2.98%, Axis Bank down by 2.69%, NTPC down by 2.28% and ICICI Bank down by 2.21% 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 8816.70, down by 121.05 points or 1.35% after trading in a range of 8803.20 and 8891.30. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Jindal Steel & Power up by 5.58%, Lupin up by 1.62%, Hindustan Unilever up by 1.59%, Dr. Reddys Lab up by 1.41% and Coal India up by 0.85%. On the flip side, Sesa Sterlite down by 3.55%, Axis Bank down by 2.80%, GAIL India down by 2.71%, Ultratech Cement down by 2.59% and NTPC down by 2.56% were the top losers.

Asian markets were trading in the red; Hang Seng decreased 194.46 points or 0.8% to 23,969.54, Nikkei 225 declined 136.06 points or 0.72% to 18,834.94, Taiwan Weighted shed 70.53 points or 0.73% to 9,575.24, Jakarta Composite tumbled 66.29 points or 1.2% to 5,448.50, Shanghai Composite dropped 30.33 points or 0.94% to 3,210.86, KOSPI Index dipped 20.71 points or 1.03% to 1,992.23, Straits Times slipped 19.65 points or 0.57% to 3,397.86 and FTSE Bursa Malaysia KLCI was down by 18.07 points or 1% to 1,788.89.