Markets remain directionless lacking any significant trigger

The Indian equity markets witnessing seesaw trade and currently remained flat but in positive territory in the late morning session. Investors were waiting for some strong trigger. International Monetary Fund cut its global growth forecasts for this year and next and warned that the United States and Europe could slip back into recession which is raising worry that demand for commodities might slow. On sectoral front banks, capital goods, telecom, consumer durables and select healthcare companies' shares were on buyers' radar. Metal, IT and realty stocks were moved higher. FMCG, oil and automobile stocks are a bit downcast at present. On the global front, most of the Asian markets were trading in green as Federal Reserve policy meeting is expected to announce further steps to stimulate the flagging US economic recovery.  Back home, the market breadth favoring the positive trend; there were 1,517 shares on the gaining side against 937 shares on the losing side while 113 shares remained unchanged.

The BSE Sensex is currently trading at 17,128.63, up by 29.35 points or 0.17%. The index has touched a high and low of 17,191.12 and 17,057.17 respectively. There were 18 stocks advancing against 12 declines on the index.

The broader indices too following the benchmarks; the BSE Mid cap and Small cap indices up by 0.72% and 0.66% respectively.

The top gaining sectoral indices on the BSE were, Bankex up by 1.23%, CG up by 0.99%, HC up by 0.71%, PSU up by 0.70% and Power up by 0.65%. While, Oil and Gas down by 0.82%, Auto down by 0.49% and FMCG down by 0.10% remained the top losers on the index.

The top gainers on the Sensex were Wipro up by 2.34%, ICICI Bank up by 2.33%, Coal India up by 1.84%, SBI up by 1.66% and BHEL up by 1.38%.

On the flip side, Hero Motocorp down by 1.70%, %, Hindalco Industries down by 1.40%, Maruti Suzuki down by 1.34%, RIL down by 1.30% and Hindustan Unilever down by 0.83% were the top losers on the Sensex.

Meanwhile, on the back of weak recovery in the global economy, the International Monetary Fund (IMF) expects Indian economy to grow by 7.5% to 7.75% in 2011-12. The projection made by IMF is on the line of Reserve Bank of India (RBI) and Prime Minister’s economic advisory council, which expects India to grow close to 8% in 2011-12.   The IMF has scaled down India’s economic growth for the calendar year 2011 and 2012. It expects India to grow by 7.8% in 2011 against the earlier estimates of 8.2%, and 7.5% in 2012 besides the earlier estimate of 7.8%. This downturn revision in growth forecast was done because of the weak expansion in global economy and recent corporate governance issue. The IMF has also scaled down the growth projections for world economy from 4.3% to 4% for 2011 and it expects economy to grow by 4.5% in 2012.

‘In India, growth is forecasted to average 7.5-7.75% during 2011-12. Activity is expected to be led by private consumption. Investment is expected to remain sluggish, reflecting, in part, recent corporate sector governance issues and a drag from the renewed global uncertainty and less favorable external financing environment,’ IMF said. By adding further IMF said that a key challenge for policymakers is to bring down inflation, which is running close to double digits and has become generalized. Despite policy tightening, real interest rates are much lower than pre-crisis averages, and credit growth is still strong.

In its latest World Economic Outlook report, the IMF said India along with Argentina and Russia requires higher monetary tightening than any other countries which are in a position to postpone such a move. However, IMF expects decline in India’s consumer price index from elevated level of 12% in 2010 to 10.6% in 2011 and 8.6% in 2012. However, India’s consumer prices are higher than the other developing nations like China and South Korea.

The IMF’s projection of consumer prices for developing Asia (India and China) for the current calendar year is around 7% and for 2012 it expects it to moderate to 5.1%. In order to tame inflation, the RBI has increased its short term lending and borrowing rates by 12 times in last 18 months, which has adversely affected the overall investment scenario hence affecting the growth. India’s economy in the first quarter of 2011-12 grew by its slowest pace in last six quarter. It grew by 7.7% in April-June 2011 from 8.8% in April-June 2010. For the current financial year, all the major agencies including RBI have done downward revision in India’s economic growth for current financial year. 

The S&P CNX Nifty is currently trading at 5,150.55, higher by 10.35 points or 0.20%. The index has touched a high and low of 5,168.40 and 5,126.65 respectively.  There were 27 stocks advancing against just 23 declines on the index.

The top gainers of the Nifty were Wipro up by 2.46%, ICICI Bank up by 2.21%, SBI up by 1.50%, BHEL up by 1.44% and Ambuja Cement up by 1.23%.

On the flip side, Hero Motocorp down by 1.77%, Maruti Suzuki down by 1.55%, Hindalco down by 1.43%, Reliance Industries down by 1.39% and Cairn down by 1.28% were the major losers on the index.

Most of the Asian equity indices were trading in the green; Shanghai Composite gained 2.49%, KLSE Composite rose 0.74%, Nikkei 225 added 0.27%, Straits Times was up by 0.34%, Seoul Composite surged 0.98% and Taiwan Weighted gained 0.57%.

On the flip side, Hang Seng was down by 0.42% and Jakarta Composite was down by 0.70%.