Markets show sign of recovery amid choppy trade

Indian markets are slowly showing signs of recovery in early noon session, though all the early recovery attempt were sold out with no major positive cues to support the markets. The statement of the IMF chief that a possible interest rate hike by the US Federal Reserve could pose risks to market stability in emerging economies, including India was weighing on the sentiments. The trade continued to remain choppy and cautiousness ahead of the outcome of the US Federal Reserve's stance on interest rates at its two-day policy meet which ends today was clearly visible. Traders were unable to get much help from the provisional data released by the stock exchanges that foreign portfolio investors (FPIs) bought shares worth a net Rs 265.52 crore yesterday. Though, the broader markets were outperforming the benchmarks and the Nifty has regained its crucial 8700 mark but the decline in power and auto stocks were restricting any big upmove in the markets.

The BSE Sensex is currently trading at 28742.28, up by 5.90 points or 0.02% after trading in a range of 28599.88 and 28806.97. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were outperforming the benchmarks with good margin; the BSE Mid cap index was up by 0.45%, while Small cap index has gained 0.54%.

The top gaining sectoral indices on the BSE were Bankex up by 0.76%, Metal up by 0.69%, Oil & Gas up by 0.51%, Realty up by 0.33%, Consumer Durables up by 0.29%, while Power down by 0.69%, Auto down by 0.19%, IT down by 0.14%, INFRA down by 0.05%, FMCG down by 0.03% were the losing indices on BSE.

The top gainers on the Sensex were Sesa Sterlite up by 2.67%, SBI up by 1.29%, Reliance Industries up by 0.88%, Hero MotoCorp up by 0.84% and Coal India up by 0.71%. On the flip side, NTPC down by 3.23%, Tata Power down by 1.24%, ONGC down by 1.15%, Tata Motors down by 1.15% and Hindustan Unilever down by 1.06% were the top losers.

Meanwhile, International Monetary Fund's (IMF) Managing Director Christine Lagarde who is on a two day visit to India, though have said that Indian economy is poised to overtake the combined GDP of Japan and Germany in the next four years on the back of recent policy reforms and improved business confidence in the country, but has warned that a possible interest rate hike by the US Federal Reserve could pose risks to market stability in emerging economies, including India, even if it is well managed by central banks.

Lagarde further stated that unwinding of monetary stimulus is likely to start later this year and even if this process is well managed, the likely volatility in financial markets could give rise to potential stability risks. Lagarde warned that if market volatility materialises, central banks need to be ready to act. Temporary, though aggressive, domestic liquidity support to certain sectors or markets may be necessary, along with targeted foreign exchange interventions.

The IMF chief welcomed Reserve Bank Governor Raghuram Rajan's recent step to introduce flexible inflation targeting as the new regime for conducting monetary policy and praised him for 'deftly' steering the Indian economy after the US Fed hinted at withdrawing its easy money policy in May 2013. She said that RBI took 'decisive action during and after' the earlier 'taper tantrum' episode and it provided foreign currency liquidity support to key sectors, allowed the rupee to depreciate, and provided judicious foreign exchange interventions to minimize disruptive movements in the rupee.

Earlier Lagarde has said that “India is a bright spot in the world economy and is increasingly helping to drive global growth'.  She added that, helped by positive policy actions that have improved confidence, and by lower global oil prices, India is set to revitalise investment and accelerate the pace of structural reforms.

The CNX Nifty is currently trading at 8724.50, up by 1.20 points or 0.01% after trading in a range of 8681.35 and 8747.25. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Sesa Sterlite up by 2.80%, Zee Entertainment up by 2.76%, BPCL up by 2.20%, IDFC up by 1.91% and Indusind Bank up by 1.75%. On the flip side, NTPC down by 3.20%, Tata Power down by 1.92%, ONGC down by 1.45%, BHEL down by 1.36% and ACC down by 1.30% were the top losers.

The Asian markets were mostly in green, Straits Times was tad higher by 0.72 points or 0.02% to 3,370.67, FTSE Bursa Malaysia KLCI gained 9.57 points or 0.54% to 1,797.44, Shanghai Composite added 44.25 points or 1.26% to 3,547.10, Taiwan Weighted surged by 113.99 points or 1.19% to 9,653.43, Nikkei 225 gained 115.72 points or 0.6% to 19,552.72, and Hang Seng was higher by 269.31 points or 1.13% to 24,170.80.

On the other hand Jakarta Composite lost 18.75 points or 0.34% to 5,420.41 and KOSPI Index was down by 1.46 points or 0.07% to 2,028.45.