Markets continue to trade weak; Nifty slips below 7850

Indian markets after paring all the early gains continue to trade deep in red, with benchmark indices down by close to a percent. There is hardly any supportive cue that could lift the markets higher and the traders are grappling with the double shock of industrial production growth slowing down to 0.1 percent in March and retail inflation inching up in April to 5.39 percent, compared to 4.83 per cent in March. The sharp slump in the rupee against dollar too was putting pressure on the sentiments. Apart from the domestic disappointment the weak trend on other Asian bourses too was weighing down. There were only scrip specific movement that were keeping the markets in action and all the sectoral indices led by metal, technology, banking, PSU and FMCG were trading in red.

There was some buzz in the private sector banks after Reserve of Bank India (RBI) issued guidelines on ownership in private sector banks. RBI allowed foreign banks to invest up to 10% in local private lenders and supranational institutions such as Life Insurance Corporation of India to take this to as much as 40% as part of a sweeping set of measures expected to help them shore up  capital and possibly encourage consolidation in the sector. Yes Bank , Kotak Mahindra Bank and HDFC Bank were down by over half a percent, while ICICI Bank was down by around two percent.

The BSE Sensex is currently trading at 25551.88, down by 238.34 points or 0.92% after trading in a range of 25516.01 and 25743.69. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap and the Small cap index both were up by 0.11%.

The losing sectoral indices on the BSE were Metal down by 1.32%, Capital Goods down by 0.99%, Bankex down by 0.96%, PSU down by 0.85%, Realty down by 0.85%.

The gainers on the Sensex were Adani Ports & SEZ up by 1.77%, Asian Paints up by 1.11% and Tata Motors up by 1.11%. On the flip side, Bharti Airtel down by 2.46%, Hindustan Unilever down by 2.41%, ONGC down by 1.98%, SBI down by 1.94% and ICICI Bank down by 1.92% were the top losers.

Meanwhile, posing challenge to the government and the central bank’s effort to rein in inflation, the retail or the Consumer Price Index (CPI) inflation for the month of April accelerated to 5.39 percent as compared to 4.83 percent in March, driven mainly by higher food costs. It was the first pickup in retail inflation since January, limiting the headroom for the Reserve Bank to lower rate in its next policy meeting.

As per the data released by the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation the CPI (Rural, Urban, Combined) on Base 2012=100 in April stood at 6.09 percent 4.68 percent and 5.39 percent respectively compared to 5.29 percent 4.36 percent and 4.87 percent same period a year ago. Similarly Consumer Food Price Index (CFPI) for all India Rural, Urban and Combined stood at 6.58 percent, 5.97 percent and 6.32 percent respectively as against 5.03 percent 5.17 percent and 5.11 percent a year ago. The General Indices (Provisional) for the month of April 2016 for Rural, Urban and Combined were 128.9, 125.3 and 127.2 respectively. The CFPI for Rural, Urban and Combined for the same month were 131.2, 131.4 and 131.2 respectively.

The consumer food price inflation shot up to 6.32 per cent in April compared to 5.21 per cent in the month of March, as prices of pulses and sugar rose. Within the food basket, there has been increase in prices of various commodities, with Sugar inflation surging by 11.18 per cent in April due to increase in international sugar prices.

Apart from sugar, inflation in vegetables rose 4.82 per cent on month on month basis and fruit inflation jumped 1.66 per cent in April. Pulses inflation remained around 34 per cent in April, while meat and fish inflation increased by 8.07 percent, egg inflation increased by 6.64 percent. Inflation in spices was at 9.80 percent.

The rising retail inflation will add to worries of RBI Governor Raghuram Rajan as it takes into account the retail inflation figures while formulating monetary policy. RBI had earlier projected the CPI based inflation to moderate in 2016-17 to around 5 percent.

The CNX Nifty is currently trading at 7834.65, down by 65.75 points or 0.83% after trading in a range of 7820.20 and 7881.00. There were 9 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 1.82%, Idea Cellular up by 1.34%, Tata Motors up by 1.23%, Asian Paints up by 1.13% and Zee Entertainment up by 0.82%. On the flip side, Eicher Motors down by 3.61%, Bharti Airtel down by 2.40%, Hindustan Unilever down by 2.35%, Hindalco down by 2.25% and SBI down by 2.10% were the top losers.

The Asian markets were trading lower, Hang Seng plunged by 224.2 points or 1.13% to 19,691.26, Nikkei 225 declined by 160.9 points or 0.97% to 16,485.44, Taiwan Weighted was lower by 71.39 points or 0.88% to 8,036.66, Jakarta Composite was down by 30.84 points or 0.64% to 4,772.48, FTSE Bursa Malaysia KLCI was down by 22.45 points or 1.36% to 1,626.53, KOSPI Index decreased by 12.24 points or 0.62% to 1,965.25 and Shanghai Composite was lower by 2.82 points or 0.1% to 2,833.04.