Benchmarks make cautious start; Nifty holds 8,650 level

Indian equity benchmarks have made a cautious start and are trading flat in early deals, as sentiments remained down-beat after consumer price inflation (CPI) inched up to a 22-month high of 5.77% in June, from 5.76% in May. Traders remained on sidelines ahead of wholesale price index (WPI) data scheduled to be announced later today. Traders also remained concerned on report that after rising for the first time in 18 months in June, exports shrank again in July, contracting 6.84 percent due to decline in shipments of engineering goods and petroleum products. However, some support came with Industrial Production (IIP) improving to 2.1% in June as compared to 1.2% in May, the consumer price index (CPI) rose for fourth straight month to 6.07% in July as compared to 5.76% in June 2016. Traders also took some encouragement with Prime Minister Narendra Modi, vowing to keep inflation under control stating that he has tried to stay away from populism which the past regimes practiced to get recognition while 'emptying the exchequer'.

On the global front, Asian markets were exhibiting mixed trend at this point of time, though some of them are in green on record-high close for US equities and oil’s return to more than $45 a barrel.

Back home, shares of Infosys declined to its lowest level since December 9, 2015. The stock is down by almost 2% after a key client Royal Bank of Scotland (RBS) scrapped a project to set up a separate bank in the United Kingdom, for which IT major was a key technology partner.

The broader indices however were outperforming benchmarks, while the market breadth on the BSE was evenly divided; there were 979 shares on the gaining side against 923 shares on the losing side while 96 shares remain unchanged.

The BSE Sensex is currently trading at 28164.52, up by 12.12 points or 0.04% after trading in a range of 28090.85 and 28196.16. There were 17 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.50%, while Small cap index was up by 0.14%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.12%, Utilities up by 0.77%, Power up by 0.71%, Energy up by 0.66% and PSU up by 0.62%, while Telecom down by 0.86%, TECK down by 0.77%, IT down by 0.76%, Consumer Durables down by 0.50% and Realty down by 0.13% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports &Special up by 3.26%, Power Grid up by 2.19%, ITC up by 1.20%, Cipla up by 1.18% and Lupin up by 1.07%. On the flip side, Infosys down by 1.74%, Sun Pharma down by 0.99%, Tata Motors down by 0.93%, Wipro down by 0.60% and HDFC down by 0.57% were the top losers.

Meanwhile, retail inflation, based on Consumer Price Index (CPI) shot up to nearly 2 year high to 6.07% in July, as compared to 5.77% in June and 3.69% in July 2015. Inflation was highest since September 2014, when it was 6.46%. CPI inflation for urban sector was 5.39% in July, while for rural segment it was 6.66%.

As per the data released by the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation CPI, on Base 2012=100, CPI (General) for Rural was 133.0, for Urban was 129.0 and for combined stood at 131.1 for the month of July. Consumer Food Price Index (CFPI) for all India Rural, Urban and Combined for July 2016, stood at 8.25%, 8.80% and 8.35% respectively compared to 2.75%, 1.01% and 2.15% in the month of July 2015.

Food inflation during the month rose to 8.35%, up from 7.79% in June. The CPI food index, in July rose from 137 to 138.8. Sugar and confectionary inflation rose to 21.91% against 16.79% in June; oil and fats to 4.96% and spices to 9.04%. There was an uptick in prices of cereals and products with inflation standing at 3.88%, while that for eggs shot up to 9.34% against 5.51%. Milk and products, also used as key ingredient for making eatables during festival, saw inflation rising to 4.13% in July from 3.43% in June. Inflation in fruits, vegetable and pulses was 3.53%, 14.06% and 27.53% respectively.

Inflation is well above the Reserve Bank of India’s (RBI’s) comfortable level, on surge in prices of food items as demand for sugar, oil & fats and spices rose ahead of the festival season. Government has put inflation targeting at 4% with range of plus/minus 2% for next five years under the new monetary policy framework agreement with the RBI.

The CNX Nifty is currently trading at 8670.55, down by 1.60 points or 0.02% after trading in a range of 8647.10 and 8680.85. There were 27 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Adani Ports & Special up by 2.81%, BPCL up by 2.25%, Power Grid up by 1.94%, Yes Bank up by 1.55% and Cipla up by 1.43%. On the flip side, Bharti Infratel down by 2.49%, Infosys down by 1.62%, Aurobindo Pharma down by 1.32%, Tata Motors down by 1.29% and Tech Mahindra down by 1.07% were the top losers.

Asian markets were trading mixed; Nikkei 225 declined 199.45 points or 1.18% to 16,670.11, Taiwan Weighted decreased 49.04 points or 0.54% to 9,099.47, Shanghai Composite shed 16.24 points or 0.52% to 3,108.95 and Hang Seng was down by 5.64 points or 0.02% to 22,926.87. On the flip side, KOSPI Index rose 1.34 points or 0.07% to 2,051.81, FTSE Bursa Malaysia KLCI increased 7.94 points or 0.47% to 1,698.27 and Jakarta Composite was up by 44.14 points or 0.83% to 5,364.70.