Benchmarks attempt recovery; FMCG stocks aid

Erosion seems to have halted at D-street, leding to slender recovery in benchmark equity indices. However, the overall mood remains downbeat on account of globally risk of sentiment, which was triggered after unusual bailout proposal for Cyprus threatened to set off fresh turmoil in the euro zone.  Benchmark 30 Share index, Sensex is currently trading above the psychological 19250 level, with a loss of over 150 points, similarly, barometer index on NSE, Nifty, is trading above 5800 level, with a loss of close to 50 points. Investors across the globe were rattled by reports of Cyprus’ government agreeing to a levy of nearly 10 per cent on Cypriots as part of a deal with fellow euro-zone countries and international creditors in order to qualify for a $13 billion bailout. Back home, investor’s were hesitant to take position ahead of central bank's policy review on Tuesday. Meanwhile, reports suggesting of higher inflation posing threat to country’s sovereign ratings, weighed on investors sentiment.

Sectorally, Metal, Public Sector Undertaking and Auto counters are the worst performers, while Fast Moving Consumer Goods stocks have managed to stage resilience. Even Sugar stocks have hogged limelight on hopes of price decontrol decision. The cabinet committee on economic affairs is likely to discuss freeing of sugar prices and the proposed food security legislation, which is expected to be a key campaign plank for the ruling Congress-led United Progressive Alliance coalition in the state polls and the 2014 general elections. The overall market breadth on BSE is in the favour of declines, which have outnumbered advances in the ratio of 1654:812, while 125 shares remained unchanged.

The BSE Sensex is currently trading at 19269.12, down by 158.44 points or 0.82% after trading in a range of 19317.88 and 19232.23. There were 4 stocks advancing against 26 declines on the index.

The broader indices continued to trade under pressure; the BSE Mid cap and Small cap indices were trading lower by 0.43% and 0.81% respectively.

The only gaining sectoral index on the BSE was, FMCG up by 0.21%, while Metal down by 2.17%, PSU down by 1.71%, Auto down by 1.32%, Realty down by 1.20% and Oil & Gas down by 1.11% were the top losers on the BSE.

The few gainers on the Sensex were Hindustan Unilever up by 1.33%, Cipla up by 1.22%, Sun Pharma up by 0.51%, Hero MotoCorp up by 0.09% and L&T up by 0.08%.

On the flip side, Coal India was down by 5.33%, Gail India down by 2.85%, Tata Power down by 2.75%, Maruti Suzuki down by 2.15% and Sterlite Industries down by 2.07% were the top losers on the Sensex.

Meanwhile, Moody's Investors Service in a report has said that India's high food inflation is negative for the country's sovereign ratings and it has a potential to hurt government finances and monetary policy flexibility. Sustained food inflation poses a threat because it exacerbates the country’s macroeconomic challenges of slowing growth, high inflation and large fiscal and current account deficits, the report added.

Further, the report underscored that even if non-food inflation growth pace is slowing down, sustained food inflation over several quarters, as in India, can ultimately revive non-food inflation, if wages increase in response to a rising cost of living. It also stated that high inflation curbs the extent to which the central bank may lower interest rates, to revive the sagging economic growth. These comments assume significant important as they come a day prior to Central bank announcing its mid-quarter monetary policy review.

To highlight, Moody's is the only major credit agency to rate India with a 'stable' outlook, while other two major agencies, Fitch Ratings and Standard and Poor's Ratings Services have reduced their outlook on India to 'negative' from 'stable' last year. 

Meanwhile, the non-food manufacturing inflation or core inflation slowed to 3.8%, India’s wholesale price inflation for food eased slightly to 11.4% in February, slightly lower than January’s 11.9%, second highest in two years.

The CNX Nifty is currently trading at 5,829.40, down by 43.20 points or 0.74% after trading in a range of 5,842.45 and 5,814.35. There were 9 stocks advancing against 41 declines on the index.

The top gainers of the Nifty were Cipla up by 1.32%, Hindustan Unilever up by 1.18%, Lupin up by 1.03%, Cairn India up by 0.73% and HCL Tech up by 0.73%.

On the flip side, Coal India down by 5.41%, Gail India down by 2.83%, BPCL down by 2.76%, Tata Power down by 2.61% and Ambuja Cement down by 2.53% were the major losers on the index.

All Asian equity indices continued to reel in red; Shanghai Composite descended by 1.65%, Hang Seng tumbled down 1.98%, Jakarta Composite slipped 0.60%, KLSE Composite dropped 0.45%, Nikkei 225 crumbled 2.71%, Straits Times contracted by 0.94%, KOSPI Composite decreased 0.92% and Taiwan Weighted plunged by 1.47%.