Markets trade choppy in early deals; Sensex holds 28,000 level

Indian equity benchmarks are trading choppy in early deals on Wednesday with key gauges somehow managing to hold on to their crucial 28,000 (Sensex) and 8,650 (Nifty) levels. After opening slightly higher, the benchmark indices slipped into the red tracking selling pressure in FMCG, Healthcare and banking stocks. Traders also failed to get any sense of relief with reports that India's direct tax collection for the June quarter of FY2017 grew 24 per cent, while indirect tax collection was up by 30 per cent. The collection up to July indicates that 18.82 per cent of the Annual Budget target of direct taxes has been achieved in the first four months of the fiscal.
Asian stocks retreated from an almost one-year high as Japanese shares dropped after the yen rebounded and as commodity companies led losses across the region. Back home, losses remained capped with report that foreign portfolio investors (FPIs) bought shares worth net Rs 144.15 crore yesterday as per provisional data released by the stock exchanges. Appreciation in Indian rupee too limited downfall of Indian equities. The Indian rupee on Wednesday hit a two-month high against the US dollar at 66.68 a dollar in early deals, up by 0.24% from its previous close of 66.84.

The BSE Sensex is currently trading at 28045.28, down by 39.88 points or 0.14% after trading in a range of 28033.34 and 28143.28. There were 11 stocks advancing against 18 stocks declining on the index, while one stock remained unchanged.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.07%, while Small cap index was up by 0.13%.

The top gaining sectoral indices on the BSE were Metal up by 0.58%, Industrials  up by 0.24%, Realty up by 0.15%, Power up by 0.10% and PSU up by 0.08%, while FMCG down by 0.60%, Bankex down by 0.25%, Oil & Gas down by 0.13%, Consumer Durables down by 0.09% and Capital Goods down by 0.08% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports &Special up by 4.78%, Bajaj Auto up by 1.11%, Bharti Airtel up by 0.76%, TCS up by 0.73% and ONGC up by 0.66%. On the flip side, ITC down by 0.98%, Lupin down by 0.91%, GAIL India down by 0.80%, Dr. Reddys Lab down by 0.80% and Cipla down by 0.65% were the top losers.

Meanwhile, international rating agency Moody’s Investors Service in its latest report has said that food price inflation will remain moderate in the near term aided by larger than average monsoon rainfall and contributing to keeping headline inflation within or close to target this year, but implementation of the 7th Pay Commission award could stoke prices.

Moody’s said that there is upside risks related to the implications of the rise in public sector wages with the implementation of some of the Pay Commission’s recommendations. However, the less accommodative monetary policy stance at present than in 2009-13, when the RBI’s policy interest rates were well below inflation, mitigates these risks. Further it said higher wages boost consumption significantly, but inflationary pressures could rise. When the full 7th Pay panel recommendations are implemented, further inflationary pressure could arise as a consequence of the increase in housing allowances.

The government has notified 2.57 time hike in basic salary of 1 crore government employees and pensioners as per the 7th Pay Commission recommendations, consequently the pay hike has been made effective from January 1, 2016. The RBI in its bi-monthly monetary policy too had said it expects some upside risk to 5 per cent inflation target by March 2017 mainly on account of the 7th Pay Commission award and maintained status quo on key rates, citing upside risks to the Reserve Bank’s inflation target.

The CNX Nifty is currently trading at 8666.20, down by 12.05 points or 0.14% after trading in a range of 8658.20 and 8690.10. There were 21 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Adani Ports & Special up by 4.88%, BPCL up by 1.22%, Hindalco up by 1.16%, Bajaj Auto up by 1.07% and Aurobindo Pharma up by 0.78%. On the flip side, Grasim Industries down by 2.31%, Bharti Infratel down by 1.60%, Ambuja Cement down by 1.37%, Lupin down by 1.18% and Tech Mahindra down by 1.09% were the top losers.

Asian markets were trading mixed; KOSPI Index rose 3.91 points or 0.19% to 2,047.69, Taiwan Weighted increased 27.38 points or 0.3% to 9,182.46, Nikkei 225 jumped 51.1 points or 0.3% to 16,816.07 and Hang Seng was up by 92.84 points or 0.41% to 22,558.45. On the flip side, Jakarta Composite decreased 22.48 points or 0.41% to 5,417.81, Shanghai Composite shed 3.08 points or 0.1% to 3,022.60 and FTSE Bursa Malaysia KLCI was down by 1.29 points or 0.08% to 1,670.42.