Benchmarks continue its weak trade; broader indices persist to outperform

Indian equity indices are trading in red on a subdued note in absence of buying among investors who are reluctant to pick shares ahead of the US Federal Reserve's monetary policy meeting outcome. Local sentiments were also hurt by PMEAC chairman C Rangarajan’s expectations that inflation may stay at current elevated level for coming three months and the RBI’s stance on inflation depends on the inflation scenario in the coming three weeks. Market participants were seen piling up positions in Bankex, Consumer Durables and Realty while selling was witnessed in Oil & Gas, Auto and IT sector. Stocks like Godfrey Philips, Rallis India, Eicher Motors, VIP Industries, Residency Projects, Hindoostan Mills, Surana Industries, Rainbow Papers, Tree House, Esaar India and Aanjaneya Lifecare hit new high while stocks like Media Matrix, Agre Developers and Brooks Laboratories hit new low. Alok Industries is trading in green on reports that the company’s promoter group entity, Alok Finance, purchased an additional 0.11% stake in the company from the open market.

In other scrip specific development, Anil Dhirubhai Ambani Group Company’s Reliance Infrastructure, Reliance Capital and Reliance Power were trading weak in red. GVK Power & Infrastructure was up after a block deal of 4.09 crore shares. Mobile operator Bharti Airtel and Idea Cellular rose after adding strong mobile subscribers in August 2011. Strides Arcolab marches northwards on reports that the company may sell a part of its non-specialties business. Everonn Education is locked in the upper circuit limit on the bourses today after the company said that it will sell a 12% stake to Dubai-based Varkey Group firm Gems Education. Lumax Industries was firm in green on reports that Stanley Electric is planning to acquire the 37% stake owned by Lumax's Indian promoter. K S Oils tumbled and is in red on reports that the auditors of the company have found that the company faces a possible loss of a whopping Rs 400 crore which has not been accounted for.

On the global front, Asian markets were trading in green barring Hang Seng and Jakarta while the European markets were trading in red on pessimistic note. The International Monetary Fund lowered its economic outlook for the US and Europe. It lowered economic growth estimate for the European Union of 17 nations to 1.6% from the previous estimate of 2%. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,150 and 17,100 levels, respectively. The market breadth on the BSE was positive in the ratio of 1472:1243 while, 121 scrips remained unchanged.

The BSE Sensex is currently trading at 17,044.75 down by 54.53 points or 0.32% after trading as high as 17,191.12 and as low as 17,000.61. There were 11 stocks advancing against 19 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index gained 0.53% and Small cap advanced 0.47%.

On the BSE sectoral space, Bankex up 0.81%, Consumer Durables up 0.62%, Realty up 0.58%, PSU up 0.47%, and Power up 0.47% were the major gainers while Oil & Gas down 1.20%, Auto down 0.69%, IT down 0.45%, Metal down 0.42% and FMCG down 0.26% were the top losers on the index.

JP Associates up 2.07%, ICICI Bank up 1.76%, Coal India up 1.52%, NTPC up 1.05%  and SBI up 0.95% were the major gainers on the Sensex, while Hindalco down by 3.00%, Maruti Suzuki down 2.30%, Hero MotoCorp down 2.28%, TCS down 1.78 and RIL down 1.76% were the major losers on the index.

Meanwhile, the Prime Minister’s Economic Advisory Council (PMEAC) chairman C Rangarajan expects inflation to stay at current elevated level for coming three months and the Reserve Bank of India’s stance on inflation depends on the inflation scenario in the coming three weeks.

C Rangarajan said “Monetary policy has a role to play even in supply-side inflation,” while hinting that the RBI may hike its key rates to tame inflation, if inflation stays at current level. However, he expects inflation to come down to 7% by the end of current financial year. The headline inflation, measured by the Wholesale Price Index (WPI), have been hovering around 9% from last December and for month of August it stood at 9.78%, which is very close to two digit mark.

As per the PMEAC Chairman, weak recovery in global economy and uncertainties in eurozone has raised the difficulties in restricting the current account deficit and fiscal deficit, as uncertainties in investor nations like eurozone counties and United States, will affect the capital inflow into the country.

Expenditure side management is also getting difficult on account of ballooning subsidies, especially due to international oil prices, to keep the fiscal deficit at 4.6% of the GDP as targeted, PMEAC chairman said.

However, adding further he said the economy had potential to grow at 9% but the short and medium term constraints, including inflation, were to be attended to realize the potential. But he stressed on the balancing growth and inflation in the domestic economy, by strict monetary and fiscal policy measures, to manage supply and demand side inflation.

On the impact of slowdown in eurozone and US economy, he said that the Indian IT sector might get impacted to the extent of economic slowdown in the US and Eurozone. However, he expects that the US economy will not enter into negative growth zone.

The S&P CNX Nifty is currently trading at 5,124.60, lower by 15.60 points or 0.30% after trading as high as 5,168.40 and as low as 5,109.85. There were 20 stocks advancing against 30 declines on the index.

The top gainers of the Nifty were JP Associates up 1.93%, Ambuja Cement up by 1.77%, ICIC Bank up 1.73%, Siemens up 1.23% and NTPC up 1.16%.

Hindalco down 3.00%, Hero MotoCorp down 2.52%, Cairn down 2.44%, Maruti down 2.29% and Reliance down 1.78% were the major losers on the index.

Asian markets traded on a mixed note, Shanghai Composite surged 2.66%, KLSE Composite advanced 0.63%, Nikkei 225 gained 0.23%, Straits Times rose 0.08%, Seoul Composite surged 0.89% and Taiwan Weighted amassed 0.57%. On the other hand, Hang Seng shed 1.00% and Jakarta Composite sank 1.34%.

The European markets were trading in red with, France’s CAC 40 declined 0.93%, Germany's DAX slipped 1.28% and Britain’s FTSE 100 shed 0.53%.