Markets erase early losses; trade continues in negative territory

Indian equity markets, which drifted lower after a weak start, continued to languish in the red but capped some early losses as India's gross domestic product (GDP) grew higher than expected at 5.5% in the first quarter (April-June) of 2012-13 as against the consensus estimates of 5.3%. However, this growth figure has registered a sharp decline from the robust 8% growth in the same quarter of the last financial year. The BSE Sensex and NSE Nifty showed a knee-jerk reaction as growth in every major sector explained itself that the economic growth has been slowing down. In currency markets, rupee opened lower and currently extended losses against dollar in the late morning session. On sectoral front power, automobile, FMCG, metal, realty and information technology stocks were mostly trading weak, while select healthcare, consumer durables and bank stocks were trading higher. In global markets, most Asian markets were trading in red. Back home, the market breadth favoring positive trend; there were 1,322 shares on the gaining side against 1,005 shares on the losing side while 110 shares remained unchanged.

The BSE Sensex is currently trading at 17,506.92 down by 34.72 points or 0.20% after touching a high of 17557.62 and low of 17,430.59. There were 13 stocks advancing against 16 declines and one remained unchanged on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.54% and Small cap index was up by 0.53%.

The top gainers on the BSE sectoral space were, HC up by 0.62%, CD up by 0.38%, Bankex up by 0.29%, Realty up 0.11% and CG up by 0.04%. While, FMCG down by 0.91%, Auto down by 0.65%, Power down by 0.62%, IT down by 0.56%, and Metal down by 0.40% were top losers on the index.

The top gainers on the Sensex were Cipla up by 1.75%, HDFC up by 1.44%, Bharti Airtel up by 0.89%, SBI up by 0.86% and ONGC up by 0.76%. On the flip side, Coal India was down by 1.94%, NTPC was down by 1.69%, HUL was down by 1.52%, Hero Moto Corp  was down by 1.32% and Hindalco Industries was down by 1.32%, were the top losers on the Sensex.

Meanwhile, dismissing the criticism of hawkish policy stance, Reserve Bank of India’s governor, D Subbarao, has said, “Some sacrifice of growth in inevitable, a necessary price we have to pay to rein inflation to acceptable levels. However, India’s central bank governor was quick to add that the “sacrifice of growth is only in the short term”. In the medium term, he said that, “a low and stable inflation is a necessary precondition for achieving India's growth prospects”.

On being under constant criticism for monetary policy stance, which is believed to be the major reason behind the slowing economy growth, that dipped near a decade low in March-April quarter, Subbarao cited that inflation due to this very tight policy stance, has been scaled down from 11% in 2010 to below 7% in July this year. India’s most aggressive central bank, after slashing key policy rates in April by 50 basis points to 8 percent has left the benchmark interest rates unchanged in light of growing pressure from the industry.

The wholesale price index (WPI), India's main inflation gauge, 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, but still remained persistently higher above the RBI’s comfort level of 5-6%.

Meanwhile, the parliamentary standing committee on finance, which went into the reasons for high inflation and slowing Indian economic growth, in its reports, concluded that lack of co-ordination between the government and the Reserve Bank of India (RBI) as the major problem behind the slowing growth in Asia’s third largest economy.

The S&P CNX Nifty is currently trading at 5,294.60, down by 20.45 points or 0.38% after trading in a range of 5,303.25 and 5,272.35. There were 17 stocks advancing against 32 declines on the index, while one remained unchanged.

The top gainers of the Nifty were Cipla up by 1.63%, HDFC up by 1.04%, Reliance Infra up by 1.01%, SBI up by 0.90% and Bharti Airtel up by 0.89%. On the flip side, HUL down by 2.24%, Coal India down by 2.07%, NTPC down by 1.98%, IDFC down by 1.73% and Hindalco down by 1.46%, were major losers on the index.

Asian indices were trading on a mix note; Nikkei 225 down by 1.60%, Hang Seng index down by 0.33%, Shanghai Composite down by 0.12% and Jakarta Composite down by 0.50% and Kospi Composite Index down by 0.09%, while Taiwan Weighted up by 0.35% and Straits Times up by 0.07%, were the only gainers.

KLSE Composite was closed today on account of Merdeka day holiday.