Benchmarks turn choppy after a gap-up opening

Indian equity benchmarks have turned choppy after making a gap-up opening as traders opted to book profits at higher level amid weak global cues. However, losses remained capped as some support came after International Monetary Fund (IMF) has raised India’s growth forecast a tad, citing the resilience of its economy and robust growth momentum. The IMF now expects the economy to expand 7.6% in 2016-17, up from its earlier projection of 7.4%. Some support also came with report that foreign portfolio investors (FPIs) bought shares worth a net Rs 344.13 crore yesterday, 4 October 2016, as per provisional data released by the stock exchanges.

On the global front, Asian markets were exhibiting mixed trend at this point of time after markets were rattled by a report flagging the possible withdrawal of global stimulus measures. The US markets declined in last session on worries emanating from Europe, with traders remaining concerned about the health of the euro zone economy and European financial sector.

Back home, on the sectoral front, telecom stocks were ringing loud with reports that spectrum auction received additional bids worth Rs 3,100 crore on the third day to take total commitments to Rs 59,981 crore, leaving two-thirds of total quantum of on-offer airwaves unsold as bidders stayed away from high-cost 700 Mhz and 900 Mhz bands. However, the PSU oil marketing companies were trading in red despite hiking Petrol prices by 14 paise per litre, while diesel rate was also increased by 10 paise per litre from midnight.

The BSE Sensex is currently trading at 28319.83, down by 14.72 points or 0.05% after trading in a range of 28313.97 and 28477.65. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.14%, while Small cap index was up by 0.38%.

The top gaining sectoral indices on the BSE were Metal up by 0.84%, Power up by 0.64%, FMCG up by 0.38%, Auto up by 0.23% and PSU up by 0.20%, while Oil & Gas down by 0.42%, IT down by 0.40%, TECK down by 0.14%, Consumer Durables down by 0.14% and Bankex down by 0.13% were the losing indices on BSE.

The top gainers on the Sensex were SBI up by 1.60%, Tata Motors up by 1.47%, NTPC up by 1.28%, Maruti Suzuki up by 0.88% and Tata Steel up by 0.78%. On the flip side, Bajaj Auto down by 1.01%, ONGC down by 0.84%, Wipro down by 0.83%, Mahindra & Mahindra down by 0.70% and HDFC down by 0.66% were the top losers.

Meanwhile, India's newly appointed Monetary Policy Committee (MPC), in its first meeting, decided to cut the policy rates under the liquidity adjustment facility (LAF) by 25 basis points to 6.25 per cent from 6.5 per cent with immediate effect. Consequently, the reverse repo rate under the LAF stands adjusted to 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.75 per cent.

All the six members of MPC were in favour of the rate cut, the Reserve Bank of India (RBI) said that the decision of the MPC is consistent with an accommodative stance of monetary policy in consonance with the objective of achieving consumer price index (CPI) inflation at 5 per cent by Q4 of 2016-17. The committee also retained the projection of growth of real gross value added (GVA) for 2016-17 at 7.6 per cent, with risks evenly balanced around it.

The RBI said that the committee expects strong improvement in sowing, along with supply management measures, which will improve the food inflation outlook. The sharp drop in inflation reflects a downward shift in the momentum of food inflation - which holds the key to future inflation outcomes -rather than merely the statistical effects of a favorable base effect.

The RBI also said that the momentum of growth is expected to quicken with a normal monsoon raising agricultural growth and rural demand, as well as by the stimulus to the urban consumption spending from the pay commission’s award. The accommodative stance of monetary policy and comfortable liquidity conditions should support a revival of credit to the productive sectors. It said that international financial markets were overwhelmed by the Brexit vote in Q2, with equity markets losing valuations worldwide, currencies plunging and turning volatile, and investors rushing for safe havens. Markets, however, recovered quickly and reclaimed lost ground in Q3, with a return of risk appetite propelling capital flows back into EMEs.

The CNX Nifty is currently trading at 8765.30, down by 3.85 points or 0.04% after trading in a range of 8756.90 and 8806.95. There were 25 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 2.66%, Bharti Infratel up by 2.38%, Tata Motors - DVR up by 1.63%, SBI up by 1.46% and Tata Motors up by 1.43%. On the flip side, Bajaj Auto down by 1.11%, ONGC down by 0.86%, Wipro down by 0.85%, HDFC down by 0.84% and BPCL down by 0.77% were the top losers.

Asian markets were trading mixed; FTSE Bursa Malaysia KLCI gained 2.12 points or 0.13% to 1,663.37, Nikkei 225 rose 92.38 points or 0.55% to 16,828.03 and Hang Seng was up by 106.77 points or 0.45% to 23,796.21.

On the flip side, Jakarta Composite decreased 54.45 points or 0.99% to 5,417.87, Taiwan Weighted slipped 16.4 points or 0.18% to 9,271.37 and KOSPI Index was down by 0.02 points or 0% to 2,054.84.