Benchmarks trade slightly in red in morning deals

Indian equity benchmarks, soon after making a positive start, entered into red terrain in morning deals, concerned with India’s Consumer Price Index (CPI)-based inflation for the month of May 2016 rising to 5.76%, the highest in 19 months, and the most since the new series of retail inflation with base year of 2012 was introduced from January 2015. Traders also remained on sidelines ahead of wholesale price index inflation data slated to be released later in the day. Weakness in Indian rupee coupled with weak Asian counters too weighed on sentiments. Most of the Asian markets were trading lower at this point of time, following a lower finish in US stocks as investors looked ahead to central bank meetings in the US and Japan. The US Federal Open Market Committee will begin its two-day meeting today while the Bank of Japan will start its two-day meeting tomorrow.

Back home, losses remained capped with Minister of State for Finance Jayant Sinha’s statement that the government has enough backing from smaller regional parties to pass the Bill in Rajya Sabha without support from the main opposition Congress party and if we can pass it in the monsoon session of Parliament, then we can implement it in April 1, 2017. Sentiments also got some support with report that foreign portfolio investors (FPIs) bought shares worth a net Rs 212.24 crore yesterday as per provisional data released by the stock exchanges. On the sectoral front, stocks related to banking and realty companies remained on buyers’ radar, as the Reserve Bank of India has thrown a lifeline for overleveraged companies and banks to put an end to future bad loans by permitting capital restructuring which would see banks taking equity in companies. Select stocks in Power space too edged higher on a key energy report stating that weak coal and gas prices will not stop record investment in renewables over the coming decades as the cost of generating clean energy drops.

The BSE Sensex is currently trading at 26370.03, down by 26.74 points or 0.10% after trading in a range of 26356.49 and 26485.45. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.19%, while Small cap index gained 0.53%.

The top gaining sectoral indices on the BSE were Realty up by 1.00%, Consumer Durables up by 0.76%, Industrials up by 0.59%, Capital Goods up by 0.36% and PSU up by 0.29%, while Telecom down by 0.36%, TECK down by 0.23%, IT down by 0.21%, Finance down by 0.12% and Power down by 0.05% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports & Special up by 1.95%, SBI up by 1.14%, Tata Motors up by 1.14%, ICICI Bank up by 0.66% and ONGC up by 0.59%. On the flip side, Hero MotoCorp down by 0.96%, HDFC down by 0.93%, NTPC down by 0.91%, Bharti Airtel down by 0.91% and Bajaj Auto down by 0.85% were the top losers.

Meanwhile, the retail inflation or the Consumer Price Index (CPI) inflation, spiked again for the second consecutive month in May, on account of high food and fuel prices. The retail inflation for May rose to 5.76 per cent, compared with 5.39 per cent in April. This numbers has weakened the prospects of a rate cut by the Reserve Bank of India in August this year.  Meanwhile, CPI in April was revised upwards to 5.47 per cent from 5.39 per cent earlier.

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 May stood at  6.45 percent, 4.89 percent and 5.76 percent respectively, compared to 5.52 percent, 4.41 percent and 5.01 percent same period a year ago. Similarly Consumer Food Price Index (CFPI) for all India Rural, Urban and Combined stood at 7.75 percent, 7.24 percent and 7.55 percent a year ago. The General Indices (Provisional) for the month of May 2016 for Rural, Urban and Combined were 130.3, 126.6 and 128.6 respectively. The CFPI for Rural, Urban and Combined for the same month were 133.4, 134.8 and 133.9 respectively.

Food inflation which counts for nearly half of CPI, jumped to 7.55 percent in May 2016 from 6.40 percent in previous month and 4.80 per cent in May 2015. The big shock came in the form of Vegetable inflation that rose to 10.77 percent in May from 4.98 percent in April, the highest level in fourteen months. Prices of pulses climbed 31.57 percent followed by sugar and confectionery which became dearer by 13.96 percent. While clothing, footwear inflation declined to 5.37 percent compared to 5.56 percent cereals & products inflation rose to 2.59 percent versus 2.43 percent in April. Combined fuel & light inflation declined to 2.94 percent compared to 3.03 percent in the previous month. Urban consumer housing inflation also dipped to 5.35 percent versus 5.37 percent in April.

The May inflation acceleration is above RBI's expectation of between 5 per cent retail inflation by March 2017. The RBI, which retained its key rates in the last policy review, citing uncertainty on inflation and the monsoon situation, is likely to turn even more cautious after the May numbers as it takes into account the retail inflation figures while formulating monetary policy.

The CNX Nifty is currently trading at 8102.85, down by 7.75 points or 0.10% after trading in a range of 8097.20 and 8134.95. There were 20 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 1.92%, Bank of Baroda up by 1.51%, SBI up by 1.31%, Tata Motors up by 1.16% and ICICI Bank up by 0.78%. On the flip side, Bharti Airtel down by 0.99%, Ambuja Cement down by 0.88%, NTPC down by 0.87%, Zee Entertainment down by 0.84% and HDFC down by 0.83% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 declined 241.05 points or 1.5% to 15,778.13, Hang Seng slipped 51.42 points or 0.25% to 20,461.57, KOSPI Index decreased 8.67 points or 0.44% to 1,970.39, Shanghai Composite dipped 7.07 points or 0.25% to 2,826.00 and FTSE Bursa Malaysia KLCI was down by 2.79 points or 0.17% to 1,626.98. On the flip side, Jakarta Composite increased 11.57 points or 0.24% to 4,818.80 and Taiwan Weighted was up by 26.39 points or 0.31% to 8,562.61.