Markets show choppiness in initial trade on Monday

Indian markets have made a cautious start of the crucial week, when Federal Reserve is going to have its important rate-setting meeting. Traders across the globe are cautiously eyeing the outcome of the meeting later in the week. On the domestic front, the marketmen are eyeing the twin inflation numbers slated to be announced later in the day. The WPI will be revealed during mid day, while the CPI numbers will come after market hours. Back on street, there is mild volatility and the major averages are moving in and out of the red, though there is not much serious profit taking and traders were getting some encouragement with the data of index of industrial production announced on Friday after market hours. According to the official data Index of Industrial Production (IIP) rose by 4.2 per cent in July against 0.9 per cent growth a year ago, supported by good performance of manufacturing and capital goods sectors. The manufacturing sector, which constitutes over 75 per cent of the index, grew by 4.7 per cent in July 2015 against a contraction of 0.3 per cent in the same month in 2014. The broader markets are performing good, holding their gains of over half a percent, while on the sectoral front most of the sectoral indices on the BSE were trading in green led by metal, realty and power, while some somberness was seen in the auto and consumer durables.

The BSE Sensex is currently trading at 25608.51, down by 1.70 points or 0.01% after trading in a range of 25531.07 and 25706.87. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices trading in green were outperforming the benchmarks; the BSE Mid cap index was up by 0.80%, while Small cap index gained 0.57%.

The top gaining sectoral indices on the BSE were Metal up by 1.02%, Realty up by 0.85%, Power up by 0.81%, PSU up by 0.70%, Oil & Gas up by 0.55%, while Auto down by 0.18%, Consumer Durables down by 0.07% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.95%, GAIL India up by 1.19%, NTPC up by 1.17%, Axis Bank up by 0.89% and Vedanta up by 0.77%. On the flip side, Reliance Industries down by 0.76%, Lupin down by 0.75%, ICICI Bank down by 0.58%, HDFC down by 0.52% and Hero MotoCorp down by 0.50% were the top losers.

Meanwhile, after NITI aayog vice chairman Arvind Panagariya stated that RBI has room to cut rates by 50-100 bps, now Minister of State for Finance Jayant Sinha has batted for a rate cut and said that RBI should take into account various factors, including low inflation, while deciding on monetary policy stance.

Sinha stressed on the need to make the Indian exports more competitive by bringing down the cost of capital as also the cost of manufacturing and pointed that the country's economic “growth is not at its potential”. Referring to declining exports, Sinha said there is a need to make Indian exports more competitive by bringing down the cost of capital and cost of manufacturing. He added that RBI will certainly look into the factors like negative wholesale inflation and low GDP deflator while 'establishing its monetary policy'.

He further said RBI is confronted with some conflicting data as WPI is in negative territory, the GDP deflator is at zero, but CPI (retail inflation) looks to be rising from 3.78 per cent in July and get back to 5-6 per cent. So, how one takes into account all these data to decide what the inflationary expectations are and how to best anchor inflationary expectations, that is the job of RBI,' Sinha told PTI in an interview.

Reserve Bank is scheduled to announce its next bi-monthly monetary policy review for the current fiscal on September 29, amid rate cut calls from the industry to boost growth rate, which fell to 7 per cent in the first quarter of 2015-16.

The CNX Nifty is currently trading at 7787.10, down by 2.20 points or 0.03% after trading in a range of 7761.85 and 7811.10. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were BPCL up by 2.62%, Tata Steel up by 2.04%, Asian Paints up by 1.45%, NMDC up by 1.30% and Tata Power up by 1.26%. On the flip side, Cairn India down by 2.64%, Lupin down by 0.71%, Reliance Industries down by 0.69%, ICICI Bank down by 0.67% and Hero MotoCorp down by 0.62% were the top losers.

Asian markets were trading mostly in red, though FTSE Bursa Malaysia KLCI was up by 7.13 points or 0.44% to 1,610.73 and Jakarta Composite gained 12.63 points or 0.29% to 4,373.10.

On the other hand, Nikkei 225 declined by 225.12 points or 1.23% to 18,039.10, Shanghai Composite slumped by 102.53 points or 3.2% to 3,097.71, Taiwan Weighted lost 29.23 points or 0.35% to 8,276.59, Hang Seng declined by 22.15 points or 0.1% to 21,482.22, KOSPI Index was lower by18.3 points or 0.94% to 1,923.07 and Straits Times was down by13.49 points or 0.47% to 2,874.54.