Local equities trade slightly in red

Local equity benchmarks were trading slightly in red, just below the neutral lines, in the morning session. Weakness was visible in the broader markets with the S&P BSE Mid-cap losing over half a percent and the S&P BSE Small-cap indices losing around quarter a percent. Traders remained cautions with SBI's report stating that the sharp decline in the headline inflation print to 3.31% for October a year-year-low will result in a prolonged pause in the rates, but raises a big question mark on the Reserve Bank’s inflation forecasting. However, losses remained capped as traders took some solace with a report stating that India is pushing for liberalising norms to promote services trade with 15 other countries including China as part of a mega free trade agreement as it looks for a balanced pact with these nations. Meanwhile, a report also stated that India's industrial production grew marginally at 4.5% in September as against 4.3% in August. Manufacturing sector output, which accounts for more than three-fourths of the entire index, was unchanged at 4.6%.

On the global front, Asian markets were trading mostly in red, as investors assessed the future of equities after the roller-coaster that markets have been on in the last few weeks. Back home, Aviation industries stock were buzzing on the streets, as the International Air Transport Association (IATA), a global airline association indicated that Indian airlines achieved their 49th consecutive month of double-digit traffic growth as demand rose 19.8% in September.

The BSE Sensex is currently trading at 34795.02, down by 17.97 points or 0.05% after trading in a range of 34672.20 and 34861.26. There were 17 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.56%, while Small cap index was down by 0.27%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.12%, Energy up by 0.90%, Capital Goods up by 0.33%, PSU up by 0.24% and Power was up by 0.19%, while Telecom down by 1.33%, Consumer Durables down by 1.04%, Realty down by 0.98%, Healthcare down by 0.86% and Bankex was down by 0.30% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 1.08%, Asian Paints up by 0.85%, Axis Bank up by 0.79%, Power Grid Corporation up by 0.73% and Mahindra & Mahindra was up by 0.59%. On the flip side, Sun Pharma down by 2.85%, Tata Motors down by 2.66%, Tata Motors - DVR down by 1.79%, Bharti Airtel down by 1.08% and IndusInd Bank was down by 0.96% were the top losers.

Meanwhile, SBI Research in its latest report has showed that the sharp decline in the headline inflation print to 3.31 percent for October--a year-year-low-- will result in a prolonged pause in the rates, however raises a ‘big question mark’ on the Reserve Bank's inflation forecasting.  It underlined “We now believe a prolonged pause by the Reserve Bank till the first quarter of FY20. But most importantly, there has to be a serious rethink by the RBI on inflation forecasting”.

The report further pointed out that the latest inflation print indicates the ‘uncertainty’ about the inflation forecasting done by the six-member Monetary Policy Committee, which sets the interest rates. The report called upon the MPC to work with short-term forecasts for the next three-six months as macro-variables like oil prices are now almost difficult to predict. It pointed out that the oil price crash in FY15 had resulted in inflation undershooting RBI projection by more than 3 percentage points in December 2014.

Besides, the report said that the RBI, which has been mandated to keep the inflation at 4 percent with a 2 percentage points change either way, had pegged inflation to come at 4.4 percent by December. Moreover, it stated that the slower headline inflation also suggests that there is little food procurement happening on the ground and called it as a matter of serious concern, and adding that if oil prices continue to slide, headline inflation can also come below 3 percent in the next two months.

The CNX Nifty is currently trading at 10477.80, down by 4.40 points or 0.04% after trading in a range of 10440.55 and 10503.65. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were HPCL up by 3.69%, BPCL up by 3.50%, Indian Oil Corporation up by 3.15%, Ultratech Cement up by 1.73% and Coal India was up by 1.12%. On the flip side, Sun Pharma down by 3.36%, Tata Motors down by 2.61%, UPL down by 1.79%, Indiabulls Housing Finance down by 1.65% and Bharti Airtel was down by 1.45% were the top losers.

Asian markets were trading mostly in red, Nikkei 225 slipped 548.93 points or 2.53% to 21,720.95, Hang Seng declined 138.00 points or 0.54% to 25,495.18, Taiwan Weighted dropped 76.98 points or 0.79% to 9,754.23, KOSPI lost 18.01 points or 0.87% to 2,062.43 and Straits Times was down by 16.97 points or 0.56% to 3,051.18.

On the other hand, Shanghai Composite gained 2.94 points or 0.11% to 2,633.46 and Jakarta Composite was up by 40.04 points or 0.69% to 5,817.09.