Weakness persist in markets; Sensex extends early losses

Indian equity markets, which faltered after opening marginally higher extended early losses in the late morning session. The 30-share BSE Sensex went down 59 points, while 50-share NSE Nifty declined 18 points. Investors across the globe were waiting for decisive move from central bankers' meet at Jackson Hole on August 31, to solve ongoing Eurozone credit crisis. In currency markets, rupee extended early gains against US dollar amid fresh capital inflows into stocks. On sectoral front Automobile, information technology, realty and capital goods stocks were trading weak. Oil and metal stocks were drifting lower after opening on a slightly positive note. Power stocks were mostly trading flat, while select healthcare, FMCG and bank stocks were up in positive territory with notable gains. In global markets, most Asian shares were trading in green. Back home, the market breadth favoring negative trend; there were 1,068 shares on the gaining side against 1,256 shares on the losing side while 124 shares remain unchanged.

The BSE Sensex is currently trading at 17,572.59 down by 59.12 points or 0.34% after touching a high of 17653.90 and low of 17,571.43. There were 9 stocks advancing against 21 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.05% and Small cap index was down by 0.07%.

The top gainers on the BSE sectoral space were, HC up by 0.59%, FMCG up by 0.29% and Bankex up by 0.18%, while Auto down by 1.09%, Realty down by 0.66%, PSU down by 0.64%, CG down by 0.59% and IT down by 0.58% were the losers on the index.

Tata Power up by 2.75%, Jindal Steel up by 1.71%, Cipla up by 1.35%, Wipro up by 0.87%, HDFC Bank up by 0.53% were the major gainers on the Sensex, while Bajaj Auto down by 2.86%, ONGC down by 2.14%, BHEL down by 2.09%, Sterlite Industries down by 1.96% and Hero MotoCorp down by 1.71% were the major losers on the index. 

Mean while, pouring cold water on rate cut hopes yet again, Reserve Bank of India’s (RBI) Governor Duvvuri Subbarao has said that inflation remains too high and needs to fall further or risk more damage to the economy. India’s most aggressive central bank, which has been in eye of storm, for maintaining a status quo stance  in previous few monetary policy review, also added that cutting interest rates may support growth only in the short-term, while stubbornly high inflation will harm the economy in the longer term.

Apex Bank last pruned its main interest rate in April by a bigger-than-expected 50 basis points to 8 percent and since then has maintained a hold on key rates. However, Governor Duvvuri Subbarao, underscored that with this given hawkish stance, India’s central bank has been successful in lowering the inflation rate to 7 percent from 11 percent. But, further adding to anti-inflationary tone, stated that, “battle against inflation has not ended yet, as the rates needs to fall below 5%.  RBI’s governor also highlighted that various factors, including high commodity prices, the fiscal deficit and the monsoon, were adding to the upside risk of inflation.

India's main inflation gauge, wholesale price index (WPI), unexpectedly slipped at 6.87% for the month of July, its lowest since January 2010, as compared to 7.25% (Provisional) for the previous month and 9.36% during the corresponding month of the previous year.

India’s central bank, which so far preferred to battle out the inflation demon at the cost of sacrificing growth, which plunged to a decade low of 5.3% in March quarter, remains to hold this view, as the governor accepted that “some sacrifice to growth is an inevitable price” to pay in order to reduce price pressures. Meanwhile, a number of economists expect gross domestic product growth to be around 5.5 percent for the current fiscal year in India, Asia’s third-largest economy. Central Statistics Office will announce the Q1 June 2012 India GDP data on Friday 31 August 2012.

The S&P CNX Nifty is currently trading at 5,315.90, down by 18.70 points or 0.35% after trading in a range of 5,345.50 and 5,314.85. There were 15 stocks advancing against 35 declines on the index.

The top gainers on the Nifty were Tata Power up by 3.06%, Jindal Steel up by 1.57%, Cipla up by 1.14%, Wipro up by 1.09% and Kotak Bank up by 0.69%. While, JP Associates down by 6.96%, SAIL down by 3.26%, Sesa Goa down by 2.80%, Bajaj Auto down by 2.76% and BHEL down by 2.06% were top losers on the index.

Most of the Asian indices were trading  in green; Kospi Composite Index up by 0.65%, Nikkei 225 up by 0.31%, KLSE Composite up by 0.07%, Taiwan Weighted up by 0.40%, Straits Times up by 0.28%, and Hang Seng index up by 0.01% while Shanghai Composite down by 0.81% and Jakarta Composite  down by 0.37% were the only losers.