Markets pare most of their early gains; Nifty holds 9,900 mark

Indian equity benchmarks pared most of their early gains but managed to trade above the neutral line in late morning session. Traders were cautious with private report stating that Retail and wholesale inflation accelerated in July and the uptrend is likely to continue in the coming months, limiting the space for further monetary easing. Some concerns also came with report that the overwhelming presence of public sector is holding back the Indian economy. Investors also took cues from Reserve Bank of India's minutes of August 02 meeting. The MPC members warned inflation could start accelerating later this year. However, the indices were in green with taking some support from the report that government has revised upward the country’s overall food grain production by 2.3 million tonnes (MT) to a record 275.68 MT in 2016-17 crop year that ended in June. Meanwhile, Regulator Securities and Exchange Board of India (SEBI) has operationalised a portal for online registration of stock brokers and other market intermediaries, as part of continuing efforts to improve the ease of doing business.

On the global front, Asian markets were trading mostly in green, as tensions between the United States and North Korea came off the boil, while the Federal Reserve's concerns about weak U.S. inflation weighed on the dollar. Back home, in scrip specific development, Bharat Rasayan gained after the company issued Commercial Paper of Rs 20.00 crore on August 16, 2017, having maturity on November 14, 2017. The issue has been rated ‘A1+’ by a leading rating agency CARE Ratings. The Company has appointed HDFC Bank as Issuing & Paying Agent for this issuance.

The BSE Sensex is currently trading at 31775.67, up by 4.78 points or 0.02% after trading in a range of 31735.57 and 31937.51. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.11%, while Small cap index was up by 0.69%.

The top gaining sectoral indices on the BSE were Metal up by 1.91%, Telecom up by 1.22%, IT up by 1.00%, TECK up by 0.97% and PSU up by 0.86%, while Bankex down by 0.38%, Auto down by 0.36%, Healthcare down by 0.14%, FMCG down by 0.07% and Consumer Disc down by 0.06% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 3.52%, Infosys up by 2.68%, NTPC up by 1.65%, Bharti Airtel up by 1.22% and Reliance Industries up by 0.81%. On the flip side, Hindustan Unilever down by 1.52%, Cipla down by 1.16%, TCS down by 0.96%, HDFC down by 0.87% and Maruti Suzuki down by 0.82% were the top losers.

Meanwhile, the minutes of the Monetary Policy Committee (MPC) Meeting has revealed that RBI Governor Urjit Patel had chosen for a 25 basis points cut in the key policy rate (repo), arguing that the present low level of food prices was rare and vulnerable to upward pressures. On lower lending rates, he said that effective transmission of a policy rate cut is the key to achieving the goal of supporting the non-inflationary growth. He also pointed out that while the transmission has improved, there is still some space for banks to cut their lending rates, especially on the existing loan portfolios.

RBI Governor further said that credit growth has also been low partly because of risk aversion among banks on account of stressed assets position. Therefore, he stressed that resolution of stressed balance sheets of banks will remain important for reviving credit demand and the investment cycle. The six-member MPC headed by RBI governor had met on August 1 and 2 to decide this fiscal's third bi-monthly monetary policy. Based on the majority view at the MPC meet, the central bank cut the rate by 25 basis points to 6 percent, whereas the industry and other stakeholders were expecting more than that. 

Four members of the MPC, including RBI Governor Urjit Patel, were in favour of the monetary policy decision, while Ravindra H. Dholakia voted for a policy rate reduction of 50 basis points and another member Michael Debabrata Patra voted to hold rates at 6.25 percent. The minutes noted that the decision of the MPC was consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 percent, while supporting growth.

The CNX Nifty is currently trading at 9904.65, up by 7.35 points or 0.07% after trading in a range of 9892.75 and 9947.80. There were 24 stocks advancing against 26 stocks declining on the index, while 1 stock remained unchanged.

The top gainers on Nifty were Vedanta up by 3.73%, Coal India up by 3.21%, Infosys up by 2.86%, NTPC up by 1.65% and Hindalco up by 1.56%. On the flip side, Hindustan Unilever down by 1.50%, Cipla down by 1.26%, HDFC down by 0.90%, Maruti Suzuki down by 0.86% and TCS down by 0.86% were the top losers.

Asian markets were trading mostly in green; FTSE Bursa Malaysia KLCI increased 0.66 points or 0.04% to 1,774.41, Shanghai Composite increased 11.56 points or 0.36% to 3,258.01, KOSPI Index increased 12.46 points or 0.53% to 2,360.72 and Taiwan Weighted increased 78.98 points or 0.77% to 10,369.37.

On the flip side, Hang Seng decreased 87.61 points or 0.32% to 27,321.46 and Nikkei 225 decreased 26.79 points or 0.14% to 19,702.49.