Indian equities continue the somber run; Nifty holds 8,600 mark

The local equity markets continued to trade lower in the noon session on consistence selling in several blue chips across various sectors amid weak Asian cues and fading hopes of rate cut after nomination of Urjit Patel, as news RBI Governor, who is known for his hawkish view on inflation. Sentiments remain subdued with the private report indicating that achieving a 4 per cent inflation target in the near term seems unlikely, largely due to spike in prices of food and non-food items and the August CPI numbers are expected to be in the range of 6.1-6.3 per cent.  Some cautiousness also prevailed in the markets with the report that foreign portfolio investors (FPIs) sold shares worth a net Rs 301 crore on August 22, 2016. However, gains in information technology (IT) and Consumer Durables stocks have restrained the markets to extend losses. Some support also came with President Pranab Mukherjee’s statement that Indian economy has revived and is poised to achieve a growth rate of 7.5 per cent in the next two years. Also, the NCAER's business confidence index (BCI) registered a sequential increase of 2.2 per cent in June quarter of 2016-17, mainly driven by improvement in perception about economic conditions and financial position of firms in the next six months. Meanwhile, Moody’s Investors Service said that continued reforms to enhance business environment and moderate inflation would help India achieve robust growth but cautioned that rising contingent liability risks in the banking sector could affect its credit quality.

On the global front, Asian markets were trading mixed, as investors awaited a US Federal Reserve gathering later this week in Jackson Hole, Wyoming. Fed Chair Janet Yellen is slated to speak on Friday, and could offer clues on the timing of the US central bank's next monetary policy move. Further, the Japanese market rose despite the lackluster cues from Wall Street and the fall in crude oil as well as other commodity prices overnight.

Back home, stocks from information technology (IT) and Consumer Durables counters were supporting the markets, while those from Capital Goods, Oil & Gas and PSU counters were adding to the underlying cautious undertone. In scrip specific development, Indraprastha Gas Limited (IGL) has rallied after the company reported a healthy 44% jump in its June quarter on the back of strong operational performance. Moreover, GAIL (India) gained after the state-owned firm and Silicon Valley-based Bloom Energy signed a memorandum of understanding (MoU) to deploy revolutionary natural gas-based fuel cell technology to generate electricity.

The market breadth remained optimistic as there were 1204 shares on the gaining side against 1091 shares on the losing side, while 158 shares remained unchanged.

The BSE Sensex is currently trading at 27959.08, down by 26.46 points or 0.09% after trading in a range of 27928.63 and 28028.98. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.30%, while Small cap index was up by 0.08%.
The few gaining sectoral indices on the BSE were IT up by 1.79%, TECK up by 1.42% and Consumer Durables up by 0.07%, while Capital Goods down by 0.96%, Oil & Gas down by 0.92%, PSU down by 0.79%, FMCG down by 0.74% and Power down by 0.32% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.10%, TCS up by 1.95%, GAIL India up by 1.30%, Wipro up by 0.85% and Asian Paints up by 0.55%. On the flip side, Bajaj Auto down by 1.42%, SBI down by 1.31%, ITC down by 1.26%, Larsen & Toubro down by 1.03% and Hero MotoCorp down by 0.92% were the top losers.

Meanwhile, Urjit Patel as being the current deputy governor and in charge of monetary policy, the government has expected that he should keep in mind the requirements of growth which is a mandate of the Reserve Bank of India (RBI) Act, while trying to meet the inflation target.
Minister of State for Finance Arjun Ram Meghwal has said that Patel’s appointment as new RBI governor is the right decision and is in the interest of the country.

Considering he has good experience in monetary policies and other areas he should be able to contain inflation within the target of 4 percent, plus or minus two percentage points. Meghwal further said governor has to maintain a balance in growth and monetary policy and he also hopes that Patel will be successful in controlling inflation.

Calling Urjit Patel a competent economist, Meghwal added that Patel would strive to have a stable currency and a well-managed inflationary environment as the outgoing Governor has been doing. The government has named Patel to succeed Raghuram Rajan as the next RBI Governor for a three-year period. Patel will replace Rajan on September 4.

The CNX Nifty is currently trading at 8622.30, down by 6.85 points or 0.08% after trading in a range of 8608.00 and 8635.85. There were 20 stocks advancing against 31 stocks declining on the index.
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he top gainers on Nifty were HCL Tech up by 2.56%, Infosys up by 2.05%, TCS up by 2.04%, Tech Mahindra up by 1.42% and GAIL India up by 1.07%. On the flip side, BHEL down by 3.23%, BPCL down by 2.54%, Bajaj Auto down by 1.37%, ITC down by 1.36% and SBI down by 1.24% were the top losers.

Asian markets were trading mixed; Shanghai Composite rose 0.18%, KOSPI Index increased 0.36%, Nikkei 225 gained 0.17% and Taiwan Weighted was up by 0.55%. On the flip side, Hang Seng decreased 0.33%, Jakarta Composite shed 0.98% and FTSE Bursa Malaysia KLCI was down by 0.18%.