Markets trade flat in negative territory; lower manufacturing inflation favorable for rate cut

Indian equity markets are trading absolutely flat in negative territory as March inflation falls marginally to 6.89% versus 6.95% month-on-month. The inflation for food articles came in at 9.84% versus 6.07% in February, while primary articles inflation came in at 9.62% versus 6.28% and fuel group inflation at 10.41% versus 12.83%. Investors expect that lower manufacturing inflation will give comfort for the RBI to deliver a 25 bps rate cut tomorrow, but the higher food inflation will play a part in determining RBI's decision. On sectoral front, realty and bank stocks were trading firm. FMCG and healthcare stocks were also finding fairly good support. A few stocks from PSU, automobile and capital goods sectors have edged higher after a weak start. Metal, power, oil and information technology stocks were mostly subdued. On the global front, Asian shares were trading in red. Back home, the market breadth favoring the positive trend; there were 1,379 shares on the gaining side against 964 shares on the losing side while 117 shares remained unchanged.

The BSE Sensex is currently trading at 17,086.76, down by 7.75 points or 0.05%. The index has touched a high and low of 17,109.37 and 17,010.16 respectively. There were 16 stocks advancing against 14 declines on the index.

The broader indices continue to hold their neck in green; the BSE Mid cap and Small cap indices were trading up by 0.58% and 0.56% respectively.

The top gaining sectoral indices on the BSE were, Realty up by 1.10%, Bankex up by 0.72%, Fast Moving Consumer Goods (FMCG) up by 0.69%, Consumer Durables (CD) up by 0.56%, Health Care (HC) up by 0.48%. While, TECk down by 0.74%, Information Technology (IT) down by 0.67%, Oil and Gas down by 0.50% and Metal down by 0.07%, were the top losers on the index.

The top gainers on the Sensex were Maruti Suzuki up by 1.82%, SBI up by 1.74%, BHEL up by 1.28%, DLF up by 1.24% and Bajaj Auto up by 0.98%.

On the flip side, Bharti Airtel down by 1.46%, Infosys down by 1.39%, Hindalco Industries down by 1.08%, NTPC down by 0.93% and Mahindra & Mahindra down by 0.89% were the top losers on the Sensex.

Meanwhile, the production of sugar is expected to fall by 9.8% in FY’13, as per the estimates put out by the Center for Monitoring Indian Economy (CMIE). The drop is expected as a result of a fall in the area sown under sugarcane production.  As per CMIE, the mounting cane arrears in 2011-12 are expected to make farmers turn to alternative crops leading to shrinkage in the area under sugarcane. The economic think tank had forecast 18% growth in sugar production in FY’12.

Because of the fall in sugarcane, the production of food products and beverages, in which sugar is a major raw material will see a minimal growth of 0.5% in FY’13 after estimated to have grown by a healthy 15.8% in 2011-12.

Output of molasses is also likely to fall, which is further expected to pull down the output of industrial alcohol. The production of soybean and mustard oil, which too are the key ingredients in food products and beverages, will fall in FY’13.

However, output of other manufactured food products and beverages like biscuits, instant food mixes, milk powder, beer, IMFL (Indian made foreign liquor) and aerated water and soft drinks is expected to go up by 2-8% in the FY’13.

The S&P CNX Nifty is currently trading at 5,205.40, down by 2.05 points or 0.04%. The index has touched a high and low of 5,214.10 and 5,183.50 respectively. There were 25 stocks advancing against 25 declining ones on the index.

The top gainers of the Nifty were JP Associates up by 1.94%, Maruti up by 1.83%, SBI up by 1.66%, Ranbaxy up by 1.60% and Axis Bank up by 1.43%.

On the flip side, Ambuja Cement down by 2.30%, ACC down by 1.89%, Bharti Airtel down by 1.84%, Infosys down by 1.40% and Hindalco Industries down by 1.36% were the major losers on the index.

Most of the Asian equity indices were trading in the red; Hang Seng slid 0.57%, Jakarta Composite descended by 0.25%, KLSE Composite shed 0.21%, Nikkei 225 plunged 1.64%, Seoul Composite plummeted 0.66% and Taiwan Weighted was down by 0.75%, while Shanghai Composite up by 0.12% and Straight Times up 0.04% were the only gainers.