Benchmarks trade flat ahead of inflation data

Domestic benchmarks have made a flat start as investors remained on the safer side ahead of the wholesale price index (WPI) inflation data, to be announced later in the day. On the global front, regional peers provided some strength to the sentiments as most of the Asian markets have made a green start, though the Japanese economic growth numbers were disappointing but Bank of Japan minutes showed policy makers weren’t ruling out any options to boost the economy. Though, the US markets got a halt to their six days gaining streak and ended mostly lower overnight due to mild profit booking in late hours. Back home, inflation data for the month of July is due later in the day today and the street is expecting the inflation to have edged higher in July from 7.25 per cent in June. Reserve Bank of India (RBI) Governor Duvvuri Subbarao stuck to a hawkish tone expressing his concern that inflation remains very high and again urged the government to restrain its own borrowing. Besides inflation data, market would also watch for the steps that are likely to be announced by the government to contain the fiscal deficit. On the sectoral front metal witnessed the maximum gain in trade followed by banking and public sector undertaking while, power, healthcare and realty remained the top losers on the BSE sectoral space. The broader indices were outperforming benchmarks while, the market breadth on the BSE was positive; there were 888 shares on the gaining side against 588 shares on the losing side while 66 shares remained unchanged.

The BSE Sensex opened at 17,631.64; about 2 points higher compared to its previous closing of 17,633.45, and has touched a high and a low of 17,659.66 and 17,600.02 respectively.

The index is currently trading at 17,651.51, up by 18.06 points or 0.10%. There were 16 stocks advancing against 14 declines on the index.

The overall market breadth has made a positive start with 57.59% stocks advancing against 38.13% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices rose 0.34% and 0.50% respectively.

The top gaining sectoral indices on the BSE were, Metal up by 0.69%, Bankex up by 0.57%, PSU up by 0.55%, Oil and Gas up by 0.53% and Auto up by 0.41%. While, Power down by 0.33%, HC down by 0.31%, Realty down by 0.24%, IT down by 0.14% and FMCG down by 0.11% were the top losers on the index.

The top gainers on the Sensex were Tata Steel up by 2.14%, Coal India up by 1.50%, Tata Motors up by 1.49%, ICICI Bank up by 1.10% and Jindal Steel up by 0.99%.

On the flip side, Sun Pharma was down by 2.26%, Sterlite Industries was down by 1.27%, Maruti Suzuki was down by 1.02%, NTPC was down by 0.90% and Tata Power was down by 0.64% were the top losers on the Sensex.

Meanwhile, although concerned over Moody’s downgrade on India’s growth estimate, Prime Minister (PM) Manmohan Singh is confident that fundamentals of the Indian economy remained strong and that the economy would be able to do better than the 6.5% growth recorded in 2011-12, as investment and savings in the country remain highest in the world. Seconding Prime Minister’s views, Economic Advisory Council Chairman C Rangarajan also expects that the overall growth rate for the current year could be slightly better than last year’s 6.5%, as the chances of industrial production picking up in the second half of the year are likely with the agriculture activities’ contribution to GDP also being higher.

Attending the swearing-in ceremony of Vice-President Hamid Ansari, Prime Minister Manmohan Singh, averred that Moody’s analysis of the Indian economy, is a cause of concern, but one should not draw unwarranted conclusions. Citing a deficient monsoon and lack of progress on economic reforms, Moody’s Analytics, research unit of ratings agency Moody’s Investors Service, downgraded India's growth estimate for 2012-13 to 5.5%.

Several economists and research agencies, by now, have downgraded India's growth forecast on account of erratic rains, high interest rates, stubborn inflation, sliding industrial growth and delay in implementing policies. Adding to the flow of negative news, Fitch Ratings, which recently lowered India's credit outlook to negative, has now averred the possibility of downgrading the country's sovereign rating is more than 50 per cent in the next 12-24 months.

Prompting calls for action, India’s growth slowed to a nine-year-low of 5.3% in the January-March quarter while overall economic expansion slowed to 6.5% in 2011-12, lower than the government's estimate of 6.9%. Although Finance Minister P Chidambaram vowed to reverse the trend and has unveiled a roadmap to tackle the slowdown but a major breakthrough solution is yet to evolve.

The S&P CNX Nifty opened at 5,343.25; about 4 points lower as compared to its previous closing of 5,347.90, and has touched a high and a low of 5,356.45 and 5,336.75 respectively.

The index is currently trading at 5,355.10, higher by 7.20 points or 0.13%. There were 28 stocks advancing against 22 declines on the index.

The top gainers of the Nifty were Tata Steel up by 2.23%, Tata Motors up by 1.58%, Ranbaxy up by 1.57%, Coal India up by 1.52% and ICICI Bank up by 1.27%.

On the flip side, Sun Pharma down by 2.49%, Sterlite Industries down by 1.23%, Sesa Goa down by 1.05%, Maruti Suzuki down by 0.89% and NTPC down by 0.70%, were the major losers on the index.

Most of the Asian equity indices were trading in the green; Hang Seng was up by 55.16 points or 0.27% to 20,136.52, Jakarta Composite gained 4.32 points or 0.11% to 4,106.86, KLSE Composite was marginally up by 1.35 points or 0.10% to 1,648.04, Nikkei gained 46.03 points or 0.52% to 8,931.18, Straits Times was up by 7.54 points or 0.18% to 3,070.69, Kospi Composite was up by 14.20 points or 0.73% to 1,946.99 and Taiwan Weighted was up by 26.08 points or 0.36% to 7,463.19.

On the other hand, Shanghai Composite was lone loser, down by 9.42 points or 0.44% to 2,126.66.