Sensex, Nifty remain lower in late morning session

Indian equity benchmarks remained lower in late morning session, with both Sensex and nifty trading in red terrain. Negative cues from other Asian markets were also impacting domestic sentiments. Traders got cautious, after claiming that monetary measures taken by the RBI to ensure ample liquidity for all sectors ravaged by the pandemic have been fruitful, governor Shaktikanta Das said monetary policy normalisation or unwinding is not as simple as rolling back a carpet but a much more complex and long-term process. Traders overlooked a finance ministry report said that armed with necessary macro and micro growth drivers, India is on its way to becoming the fastest growing major economy in the world.

On the global front, Asian markets were trading mostly in red, after producer prices in Japan were up 1.2 percent on month in October, the Bank of Japan said on Thursday - accelerating from the 0.3 percent increase in September. On a yearly basis, producer prices spiked 8.0 percent - up from 6.3 percent in the previous month.

The BSE Sensex is currently trading at 59852.66, down by 500.16 points or 0.83% after trading in a range of 59744.60 and 60293.25. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.71%, while Small cap index was down by 0.39%.

The only gaining sectoral indices on the BSE were Capital Goods up by 0.74%, Consumer Durables up by 0.37% and Metal up by 0.10%, while Realty down by 2.18%, PSU down by 1.30%, IT down by 1.11%, TECK down by 1.11% and FMCG down by 1.06% were the top losing indices on BSE.

The top gainers on the Sensex were Titan Co up by 1.45%, Larsen & Toubro up by 1.32% and Tata Steel up by 0.53%. On the flip side, Tech Mahindra down by 2.68%, Bajaj Finserv down by 2.38%, Asian Paints down by 1.74%, SBI down by 1.65% and Power Grid down by 1.60% were the top losers.

Meanwhile, Reserve Bank of India (RBI) Governor Shaktikanta Das has ruled out upside risks to the 5.3 per cent inflation forecast for the current fiscal, and said that the recent cut in excise duty on diesel and petrol as well as better management of supply-side issues on the food front have contained inflationary expectations. He added that these measures are significantly positive for inflation management. Das said ‘the excise duty cut on petrol and diesel is positive for inflation. In fact, it is significantly positive for inflation (management)’. He noted that inflation has for long been a supply-side issue, and fortunately, that has been managed well this time, helping food inflation to be brought under control. However, the governor warned that core inflation still remains elevated and needs to be addressed.

The Governor said ‘Traditionally our inflation has been mainly caused by supply-side factors, but fortunately that has been addressed by the government.’ He also said ‘Food inflation started off first with edible oils, then moved onto pulses and then fuel inflation added to it. But having addressed the supply side issues well, we should be able to meet our forecast, made pre-excise duty cut, of 5.3 per cent of the year ending March.’ He added ‘All these measures have contributed to bring down retail inflation and augur well for its management’. So, he pointed out that food inflation by and large looks to be now under control.

On inflation expectations, Das said ‘So far as we are concerned, our expectation is that it will be in line with our projection of 5.3 per cent for the full fiscal, and the petrol and diesel price cut was not priced in this forecast’. He said ‘Now, it looks this is very positive for inflation management’, and added ‘So, we are sticking to our last projection’. Further, the RBI chief cautioned about high core inflation. He said ‘as far as we are concerned, core inflation has always remained elevated, and that is a policy challenge, and we are keeping a very close watch of the evolution of core inflation.’ Globally, he said the inflation outlook is grim given the rising energy and steeply rising prices of commodities like crude and steel. He added ‘Though some of them have already peaked, we have to be very careful’.

The CNX Nifty is currently trading at 17854.20, down by 163.00 points or 0.90% after trading in a range of 17826.90 and 17971.35. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Titan Co up by 1.39%, Larsen & Toubro up by 1.27%, Tata Steel up by 0.54%, Hindalco up by 0.14% and JSW Steel up by 0.05%. On the flip side, Indian Oil Corp. down by 3.76%, Tech Mahindra down by 2.73%, ONGC down by 2.69%, Bajaj Finserv down by 2.39% and Tata Consumer Products down by 2.13% were the top losers.

Asian markets were trading mostly in red; Straits Times fell 0.04 points to 3,231.28, Hang Seng slipped 37.86 points or 0.15% to 24,958.28, Taiwan Weighted declined 124.76 points or 0.71% to 17,434.89, KOSPI lost 16.78 points or 0.57% to 2,913.39 and Jakarta Composite weakened 2.55 points or 0.04% to 6,680.60. On the flip side, Nikkei 225 rose 154.71 points or 0.53% to 29,261.49 and Shanghai Composite was up by 20.69 points or 0.59% to 3,513.15.