Benchmarks trade lower; Sensex slips below 22,950 mark

After getting some serious beating in last few sessions, Indian benchmarks consolidated on Friday, altering between positive and negative territory in late morning trade, as investors remained cautious ahead of the key macro data, Index of Industrial Production (IIP) and Consumer Price Inflation (CPI) which will be announced later in the day. Sentiments got some support with RBI Governor Raghuram Rajan’s statement that the ongoing clean-up of bank balance sheets will help spur economic growth and improve the lenders’ profitability. He has also said that while the profitability of some banks may be impaired in the short-run, the system, once cleaned, will be able to support economic growth in a sustainable and profitable way. Also, the RBI assured banks that it would inject adequate cash in view of the tight liquidity conditions in the market. However, sustained capital outflows by foreign funds, a weak trend at other Asian markets and overnight losses at the US markets on worries about the global economy, kept market-participants on the tenterhooks.

Indian bourses are currently trading around the psychological 22,900 (Sensex) and 6,950 (Nifty) levels down by over one tenth of a percent. Apart from blue chips, broader indices were trading weak with both mid cap and small cap indices trading down by around two percent each. Decline in the rupee coupled with a slide in the crude oil prices also weighed on sentiment. Indian rupee weakened by 7 paise to quote at an over 29-month low of 68.37 against the dollar in early trade on sustained demand for the American currency from importers and banks.

On the global front, Asian markets trading mostly in red as mounting concerns about the health of European banks further threatened a global economic outlook already under strain from falling oil prices and slowdown in China and other emerging markets. US shares recovered somewhat from sharp losses on Thursday, but the Dow Jones industrial average still closed down by 1.6%, to 15,660.18. Back home, stocks from TECK, Auto and IT counters were supporting the markets’ uptrend, while those from Realty, Metal and Capital Goods counters were adding to the underlying cautious undertone.

In scrip specific development, Shares of Indian Bank have declined after the bank registered a 85% drop in its net profit at Rs 42.30 crore in the third quarter ended December 2015 compared to Rs 277.52 crore during the same quarter last year. Furthermore, Bharat Heavy Electricals slumped after the company reported a huge loss of Rs 1,102 crore compared to a net profit of Rs 212.60 crore in the quarter ended December 31, 2014.

]The market breadth on BSE was negative, out of 2291 stocks traded, 449 stocks advanced, while 1754 stocks declined on the BSE. 

The BSE Sensex is currently trading at 22926.91, down by 24.92 points or 0.11% after trading in a range of 22785.67 and 23116.27. There were 15 stocks advancing against 15 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.97%, while Small cap index down by 2.90%.

The top gaining sectoral indices on the BSE were TECK up by 0.66%, Auto up by 0.60% and IT up by 0.34%, while Oil & Gas down by 3.88%, Realty down by 3.31%, Metal down by 2.84%, Capital Goods down by 2.67% and PSU down by 2.62% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 5.75%, HDFC up by 2.42%, Mahindra & Mahindra up by 2.00%, NTPC up by 1.78% and Axis Bank up by 1.72%. On the flip side, BHEL down by 10.18%, ONGC down by 4.61%, GAIL India down by 3.99%, Tata Steel down by 3.87% and Adani Ports &Special down by 3.50% were the top losers.

Meanwhile, Economic Affairs Secretary Shaktikanta Das has said that the Finance Ministry and Reserve Bank of India (RBI) are broadly on the same page and working in close cooperation on composition of a Monetary Policy Committee (MPC). He said that “we always hold frequent discussions between the Finance Ministry and Reserve Bank of India for setting up Monetary Policy Committee “.

MPC will fix the benchmark interest rate of the RBI and set inflation target. The MPC will consist of representatives from the Finance Ministry and RBI, to decide on interest rate. The agreement was signed after a committee headed by Deputy Governor Urjit Patel recommended a shift to this practice. RBI joined a growing list of central banks in the world with inflation targeting as an explicit objective by signing an agreement with the government last February.

Recently, RBI governor Raghuram Rajan said that the central bank has finished negotiations with the Finance Ministry on the issue of the MPC. He also added that the work is completed. Further Rajan had said that now the government has to decide on the timing of tabling the amendments to the RBI Act before Parliament.

The CNX Nifty is currently trading at 6963.15, down by 13.20 points or 0.19% after trading in a range of 6919.70 and 7026.75. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 5.59%, HDFC up by 2.52%, Idea Cellular up by 2.27%, NTPC up by 2.03% and Power Grid up by 1.87%. On the flip side, BHEL down by 10.19%, BPCL down by 5.72%, Vedanta down by 5.30%, Hindalco down by 5.18% and ONGC down by 4.82% were the top losers.

Asian markets were trading mostly in red, Nikkei 225 was down by 3.03%, Hang Seng down by 0.53%, Taiwan Weighted down by 0.84%, KOSPI Index down by 1.26% and Jakarta Composite down by 0.82%. On the other hand, FTSE Bursa Malaysia KLCI was up by 0.07%.