Markets trade slightly in red on higher inflation

Indian equity benchmarks made a cautious start and are trading slightly in red in early deals on Tuesday, as traders remained concerned with retail inflation accelerating more than expected in October. Inflation quickened to 3.58 percent in the month, the fastest pace in seven months, from 3.28 percent increase in September. However, losses remained capped with traders taking some solace with Finance Minister Arun Jaitley’s statement that there is scope for further rationalisation of GST rates and revenue buoyancy will decide the course of rationalization. He however, ruled out single tax rate of GST, saying those seeking single rate have no understanding of tariff structure. Downside also remained limited with a private report that India is likely to achieve strong growth over the next decade and will overtake Japan in nominal GDP by 2028, to emerge as the world's third largest economy.

On the global front, the Asian markets were exhibiting mixed trend at this point of time with investors awaiting clues on monetary policy from heads of some major central banks and kept an eye on US tax reform developments. The US markets coming off their early weakness posted modest gains in the last session, though the traders remained concerned about the outlook for tax reform.

Back home, manufacturing sector stocks remained buzzing, as the Prime Minister Narendra Modi has said that the Indian government wants to make the country a Global Manufacturing Hub. He said, “We want to make India a global manufacturing hub and we want to make our youngsters job creators.” Meanwhile, Footwear retailer Khadim India made a dismal listing on the bourses today and is trading with a cut of around 5%, the IPO was subscribed 1.90 times.

The BSE Sensex is currently trading at 33016.00, down by 17.56 points or 0.05% after trading in a range of 32987.58 and 33126.55. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index shed 0.17%, while Small cap index was up by 0.19%.

The top gaining sectoral indices on the BSE were Power up by 0.38%, Consumer Discretionary Goods & Services up by 0.27%, Auto up by 0.26%, Consumer Durables up by 0.22% and FMCG was up by 0.22%, while Oil & Gas down by 0.71%, Telecom down by 0.58%, Capital Goods down by 0.53%, TECK down by 0.42% and PSU down by 0.36% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.86%, Reliance Industries up by 1.09%, Hero MotoCorp up by 0.75%, Mahindra & Mahindra up by 0.71% and Hindustan Unilever up by 0.57%. On the flip side, Sun Pharma down by 1.90%, ICICI Bank down by 1.21%, Power Grid down by 1.21%, Coal India down by 1.16% and Larsen & Toubro down by 1.00% were the top losers.

Meanwhile, India’s retail inflation accelerated to seven-month high of 3.58% in the month of October 2017, as compared to 3.28% in September 2017, but lower than 4.20% in October 2016. Consumer inflation rise was mainly due to an increase in prices of consumer food items. However, the rate still remains below the Reserve Bank of India’s medium-term target of 4%, with a tolerance band of 2%-6%. The inflation data showed that the Consumer Food Price Index (CFPI) - an indicator for food prices - also rose to 1.90% in October from 1.25% in September.

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 for October 2017, stood at 3.36%, 3.81% and 3.58% respectively, compared to at 4.78%, 3.54% and 4.20% respectively in October 2016. The data also showed that Consumer Food Price Index (CFPI) for all India Rural and Urban for October 2017 stood at 1.75% and 2.13%, respectively, compared to 3.86% and 2.33%, respectively in October 2016. The index value of CFPI for combined stood at 139.4 for the month of October.

Within the food segment, vegetable inflation quickened rapidly to 7.47% in October, from 3.92% in September. Inflation in the milk and products category quickened to 4.30% in October from 3.87% in the previous month. The food and beverages saw a growth of 2.26% in October, the fastest pace since March, and up from 1.76% in September. Besides, Pulses and products inflation witnessed a negative growth of (-) 23.13%, as compared with (-) 22.51% in September. Furthermore, the rate of growth of prices in the clothing and footwear category speeded up a tad to 4.76% in October, from 4.63% in September. Inflation in the housing sector accelerated to 6.68%, from 6.10% in the preceding month. Inflation in the fuel and light segment came in at 6.36%, up from 5.56% in September.

The CNX Nifty is currently trading at 10218.10, down by 6.85 points or 0.07% after trading in a range of 10208.40 and 10248.00. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were NTPC up by 2.20%, Reliance Industries up by 1.14%, UPL up by 0.98%, Mahindra & Mahindra up by 0.77% and Hero MotoCorp up by 0.72%. On the flip side, Bharti Infratel down by 3.53%, Sun Pharma down by 2.20%, BPCL down by 1.78%, Indian Oil down by 1.60% and HPCL down by 1.39% were the top losers.

Asian markets were trading mostly in red; Taiwan Weighted slipped 15.7 points or 0.15% to 10,668.22, Shanghai Composite decreased 15.42 points or 0.45% to 3,432.41, KOSPI Index shed 5.91 points or 0.23% to 2,524.44, FTSE Bursa Malaysia KLCI dipped 2.04 points or 0.12% to 1,735.45 and Jakarta Composite was down by 0.1 points or 0% to 6,021.36.

On the flip side, Hang Seng increased 15.99 points or 0.05% to 29,198.17 and Nikkei 225 was up by 125.31 points or 0.56% to 22,506.30.