Benchmarks edge lower ahead of IIP, inflation data

Volatility ruled the roost on street as the benchmarks, after making a positive opening, edged lower to hit intraday low in late morning session on concerns over country’s slowing economic growth ahead of the key macro-economic data scheduled later today. The government will unveil country’s July factory data and August retail inflation data after the market hours today. The factory output or IIP is expected to shrink for third straight month signalling persistent slowdown fears in Asia’s third-biggest economy. However, the rupee gained ground for sixth-straight trading session after the slew of reforms announced by the central bank last week coupled with strong trend in emerging market currencies.

On the global front, the US markets made a mixed closing overnight after a choppy trading, traders preferred to remain on sidelines with the ongoing uncertainty about the situation in Syria, while most of the Asian equity indices were trading marginally in the green at this point of time awaiting the outcome of the Federal Reserve’s meeting next week and on expectation that the US Federal Reserve’s impending stimulus reduction might be smaller than some had believed.

Back home, traders were buying, Realty, Power and Health Care while selling were seen in Banking, IT and Teck on the BSE. Meanwhile, the benchmarks NSE Nifty and BSE Sensex were trading near the psychological 5,850 and 19,800 levels respectively. The market breadth on BSE was showing positive trend with advances to declines in the ratio of 1087: 614. The BSE Sensex is currently trading at 19891.96, down by 105.49 points or 0.53% after trading in a range of 20052.05 and 19834.17. There were 13 stocks advancing against 17 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.70% and Small cap index up by 1.00%.

The top gaining sectoral indices on the BSE were, Realty up by 2.34%, Power up by 1.17%, Health Care up by 0.74%, Oil & Gas up by 0.51% and Capital Goods up by 0.50%, while Bankex down by 1.47%, IT down by 1.02%, Teck down by 0.95%, Auto down by 0.76% and Metal down by 0.61% were the top losers on the sectoral index.

The top gainers on the Sensex were Tata Power up by 3.56%, Gail India up by 2.81%, Cipla up by 2.02%, RIL up by 1.38% and NTPC up by 1.27%. On the flip side, Hero MotoCorp was down by 2.15%, Sesa Goa was down by 2.07%, ICICI Bank was down by 1.98%, HDFC Bank was down by 1.83% and  Hindustan Unilever was down by 1.59% were the top losers on the Sensex.

Meanwhile, expressing confidence over Indian economic growth recovery, the Reserve Bank of India (RBI) governor Raghuram Rajan said that India's slowing economy and its massive current account and fiscal deficits are not structural problems and can be fixed with modest reforms. The RBI governor expects that Indian economy will grow between 5 and 5.5 percent in the current fiscal.  

By adding further, Rajan said that present slowdown in the economy was paradoxically the effect of substantial fiscal and monetary stimulus that were taken by the policymakers after 2008 financial crisis to recover the economic growth. The resulting economic growth led to high inflation in the country, because the world did not slide into a second Great Depression, as was originally feared. Thereby, monetary policy has been remained tight, with high interest rates, contributing to slowing investment and consumption, he added.

At present, domestic economy is struggling with slowdown and its growth slowed down to four year low at 4.4 percent in Q1 FY14. Further, country’s current account deficit (CAD) widened to a record high of 4.8 percent of GDP in the FY14 on account high gold imports and crude oil prices. High CAD also remained main cause for rupee depreciation, which recently deflated to a record low of over 68.50 against the US dollar.

The CNX Nifty is currently trading at 5,881.75 down by 31.40 points or 0.53% after trading in a range of 5,932.00 and 5,866.30. There were 20 stocks advancing against 30 declines on the index.

The top gainers of the Nifty were IDFC up by 5.42%, Tata Power up by 4.62%, Gail up by 2.75%, Ranbaxy up by 2.72% and DLF up by 2.26%. On the flip side, JP Associate down by 7.26%, Indusind BK down by 2.76% , Grasim down by 2 .44%, Hero MotoCorp down by 2.31%, and Ambuja Cement  down by 2.12% were the major losers on the index.

The Asian equity indices were trading in mixed; Shanghai Composite was up 2.11 points or 0.09% to 2,243.37, Hang Seng jumped 59.00 points or 0.26% to 22,993.04, Jakarta Composite strengthened 16.34 points or 0.38% to 4,365.76, KLSE Composite increased 2.89 points or 0.16% to 1,771.37, and Straits Times surged 16.79 points or 0.54% to 3,124.98.

On the flip side, Nikkei 225 was down by 57.10 points or 0.40% to 4,641.52, Seoul Composite down by 3.23 points or 0.16% to 2,000.62 and Taiwan Weighted down by 1.96 points or 0.02% to 8,207.03.