Indian benchmarks end nearly flat ahead of Janet Yellen's testimony

Indian frontline equity indices prolonged the lull for yet another day and finished the session on a dull note, marginally below the neutral line, as investors at large remained reluctant to build long positions ahead of Fed Chairwoman Janet Yellen's semiannual testimony before Congress. The session largely remained characterized by choppiness as the aimless indices moved in tight-range throughout the day. Sentiments tuned dismal after Wholesale inflation shot up to a 30-month high of 5.25% in January as rising global crude oil prices spiked domestic fuel cost, even as food prices moderated. The overall inflation index of the fuel and power segment surged to 18.44% from 8.65% in the previous month. However, Retail inflation, measured in terms of Consumer Price Index (CPI), fell to a 5 year low of 3.17% in January mainly on account of declining prices of food items including vegetables and pulses. Although micro-indicators of inflation showed mixed picture, many experts believes that significant fall in CPI base inflation is result of demonetization and it will not maintain its current range, while WPI base inflation will increase if the crude oil prices continued to rise. Further, trading sentiments remained subdued with a private report that India’s economic growth is likely to remain muted in the first quarter of this calendar year with the GDP likely to grow at 5.7% in the January-March period amid subdued activity. However, investor got some comfort with Finance Minister Arun Jaitley’s statement that the Modi government's emphasis is on bold decision making and a clean economy with business friendly environment, the returns of which can be spent on the poor.

On the global front, Asian markets ended mostly lower on Tuesday as investors turned jittery ahead of testimony by the head of the Federal Reserve, which could highlight the likelihood of two or more U.S. interest rate hikes this year. Japanese markets edged lower after the yen strengthened on news that Trump's embattled national security adviser Michael Flynn has resigned over revelations that he had misled Vice President Mike Pence and other officials about his contacts with Russia. Furthermore, Chinese market ended flat after data showed China's consumer price inflation accelerated to a 32-month high in January and producer prices climbed at the fastest pace since 2011, reinforcing market expectations the central bank will continue with monetary-tightening policies. Meanwhile, European markets declined for the first time in six sessions, moving slightly lower after economic growth data from Germany and the eurozone missed forecasts.

Back home, after getting positive start, the local benchmarks slipped into negative territory and continued their lackluster performance throughout the session and ended with moderate cut. The NSE’s 50-share broadly followed index - Nifty settled with modest losses of around thirteen points below the psychological 8,800 levels, while Bombay Stock Exchange’s Sensitive Index - Sensex shed twelve points and closed above the psychological 28,300 mark. Moreover, the broader markets failed to show any kind of fervor and settled on an uninspiring note, underperforming their larger peers by a fat margin. On the BSE sectoral space, the Technology counter remained the top gainer in the space with around quarter percent gains followed by the IT pocket, which ended marginally in green. On the flipside, Auto counter languished at the bottom of the table with cuts of over a percent, while Metal, Realty and PSU sectors settled with moderate cuts of over half a percent. The market breadth remained pessimistic, as there were 1050 shares on the gaining side against 1776 shares on the losing side, while 169 shares remained unchanged.

Finally, the BSE Sensex declined by 12.31 points or 0.04% to 28339.31, while the CNX Nifty was down by 12.75 points or 0.14% to 8,792.30.

The BSE Sensex touched a high and a low of 28393.42 and 28263.45, respectively and there were 10 stocks on gainers side as against 20 stocks on the losers side on the index.

The broader indices made a negative closing; the BSE Mid cap index declined 0.56%, while Small cap index was down by 0.63%.

The few gaining sectoral indices on the BSE were TECK up by 0.32%, IT up by 0.09% and Bankex up by 0.08%, while Auto down by 1.09%, Metal down by 0.93%, Realty down by 0.72%, PSU down by 0.63% and Consumer Durables down by 0.50% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.03%, GAIL India up by 3.02%, Reliance Industries up by 1.94%, ONGC up by 1.80% and ICICI Bank up by 1.14%. On the flip side, Tata Motors down by 3.68%, Hero MotoCorp down by 2.02%, Hindustan Unilever down by 1.70%, Maruti Suzuki down by 1.39% and Power Grid down by 1.21% were the top losers.

Meanwhile, easing for the second consecutive month, retail inflation or Consumer Price Index (CPI) stood at 3.17 percent in January, 2017, its lowest level in at least five years. The decline in retail inflation has been mainly due to fall in food prices, especially those of vegetables and pulses. As per the data of the Central Statistics Office (CSO), Ministry of Statistics and Programme, the Consumer Price Index (CPI) (Rural, Urban, Combined) on Base 2012=100 stood at 3.36 percent, 2.90 percent and 3.17 percent respectively compared to 3.83 percent, 2.90 percent and 4.41 percent respectively in December 2016 and 6.48 percent 4.81 percent 5.69 percent respectively in January 2016.

The data also showed that Consumer Food Price Index (CFPI) for all India Rural, Urban and Combined for January 2017 declined considerably to 1.07 percent (-) 0.31 percent and 0.33 percent respectively compared to 2.06 percent, 0.15 percent, 1.37 percent respectively in December 2016 and 6.93 percent 6.50 percent and 6.85 percent in January 2016.

As per the data, Vegetable inflation continued to be in the negative territory at (-) 15.62 percent as against (-) 14.59 percent a month ago. For pulses and products also, the inflation rate was in negative zone at (-) 6.62 percent. However, inflation rate of meat and fish increased to 2.98 percent in January, while that for fruits stood at 5.81 per cent. The fuel and light category’s inflation rate stood at 3.42 per cent in January. Clothing and footwear inflation in January stood at 4.17 percent, lower than 4.88 per cent a month ago. Inflation for household goods and services also declined to 4.19 percent in January as against 4.45 percent a month ago.

The CNX Nifty traded in a range of 8,820.45 and 8,772.50. There were 21 stocks in green as against 30 stocks in red on the index.

The top gainers on Nifty were Bharti Airtel up by 2.96%, GAIL India up by 2.92%, Idea Cellular up by 2.10%, BHEL up by 1.98% and Reliance Industries up by 1.77%. On the flip side, Tata Motors - DVR down by 8.98%, Tata Motors down by 7.55%, BPCL down by 3.30%, ZEEL down by 2.17% and Hero MotoCorp down by 1.94% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 3.16 points or 0.04% to 7,282.08, Germany’s DAX increased 0.49 points or 0% to 11,774.92 and France’s CAC increased 2.56 points or 0.05% to 4,890.75.

Asian equity markets ended mostly lower on Tuesday ahead of Federal Reserve Chairwoman Janet Yellen's testimony before Congress today and tomorrow. Investors are waiting to see whether Yellen will offer clues to the timing of the next interest-rate increase amid signs of inflation steadily firming up. Japanese shares ended in the red after the yen strengthened on news that Trump's embattled national security adviser Michael Flynn has resigned over revelations that he had misled Vice President Mike Pence and other officials about his contacts with Russia. Meanwhile, Chinese shares ended flat after data showed China's consumer price inflation accelerated to a 32-month high in January and producer prices climbed at the fastest pace since 2011, reinforcing market expectations the central bank will continue with monetary-tightening policies.