Benchmarks pare gain in late morning session

Volatility ruled the roost on street as the benchmarks reversed initial gains and continue to trade in red in late morning session even as industrial production grew 2.6 per cent in July and retail inflation eased. Mean while, the rupee weakened in opening trade on Friday tracking weakness in offshore non-deliverable forwards but better-than-expected factory output data may limit a very sharp fall. The rupee was trading at Rs 64.02 compared with previous close of Rs 63.54 per dollar. Wholesale price inflation data, due on Monday, will be the next key trigger for markets.

On the global front, all the Asian equity benchmarks, barring Jakarta Composite, were trading in the red at this point of time as investors remained worried by how much the US Federal Reserve will cut its monthly stimulus at next week’s monetary meeting. Back home, depreciation in rupee too was dampening the sentiments. The rupee was trading at Rs 64.03 compared to its previous close of Rs 63.54 per dollar. Back home, traders were buying, Capital Goods, Realty and Power while selling were seen in IT and Teck on the BSE. Shares of India’s aviation companies viz, Spicejet and Jet Air India edged higher on the back of air fare hikes. SpiceJet pioneered the hike in fares this season and was followed by other entities, listed as well as non-listed, in the range of 25-30%.

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 1136: 513. The BSE Sensex is currently trading at 19835.62, up by 53.74 points or 0.27% after trading in a range of 19899.37 and 19702.21. There were 24 stocks advancing against 6 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.72% and Small cap index up by 0.89%.

The top gaining sectoral indices on the BSE were, Capital Goods up by 1.99%, Realty up by 1.71%, Power up by 1.66%, PSU up by 1.39% and Health Care up by 0.98%. While IT down by 0.56% and Teck down by 0.52% were the top losers on the sectoral index.

The top gainers on the Sensex were BHEL up by 3.04%, L&T up by 2.48%, Tata Power up by 2.16%, Coal India up by 2.14% and Sesa Goa up by 1.94%. On the flip side, Bharti Airtel was down by 1.31%, Wipro was down by 1.02%, HDFC was down by 0.72%, Infosys was down by 0.71% and  HDFC Bank was down by 0.58% were the top losers on the Sensex.

Meanwhile, enthused by the better than expected Indian industrial production (IIP) growth in July, India Inc has asked the Reserve Bank of India (RBI) to cut interest rates in the coming monetary policy review in order to attract much-needed investments and to boost the economic growth. Industrial production, after declining for two straight months, entered into positive zone in July, recording a growth of 2.6 percent on account of improved performance of manufacturing and electricity sectors.

The Confederation of Indian Industry (CII) Director General Chandrajit Banerjee said that in the near term, an easing of key interest rates by the central bank will enhance demand of some ailing sectors like consumer durables. Referring to the manufacturing sector, Banerjee said that the sector is performing far below its potential, so, significant interventions are required to enhance manufacturing sector competitiveness. Further, the National Manufacturing Policy (NMP) now needs to be implemented with some alacrity, he added. Meanwhile, manufacturing sector output, which constitutes over 75 percent of the index, witnessed a robust growth by 3% in July compared to the zero growth in the same month of previous year. However, during April to June period of 2013, manufacturing output declined by 0.2 percent over the same period of previous year. 

Conversely, Assocham Secretary General D S Rawat said that the RBI must announce rate cuts in the mid-quarter review of its credit policy due on September 20 as there is a need for creating conducive environment for investments, capacity creation and augmentation of industrial production on priority basis by initiating short term feasible solutions to the current growth hurdles. During April-July, 2013, IIP growth declined by 0.2 percent. Industry body Ficci said that besides rate cut by the RBI, the government must also clear hurdles through pro-active procurement policies to ensure implementation of big infrastructure projects. Meanwhile, the president of PHD Chamber of Commerce & Industry Suman Jyoti Khaitan said the industrial production in India is set to pick up further in the coming months on the back of revival in consumer goods demand as well as improving private investments from both domestic and foreign investors.

The CNX Nifty is currently trading at 5,868.40 up by 17.70 points or 0.30% after trading in a range of 5,884.30 and 5,822.90. There were 40 stocks advancing against 10 declines on the index.

The top gainers of the Nifty were BHEL up by 3.19%, DLF up by 2.98%, JP Associate up by 2.61%, L&T up by 2.52% and PNB up by 2.30%. On the flip side, HCL Tech down by 2.04%, Bharti Airtel down by 1.38% BPCL down by 1.22%, UltraTech Cement down by 1.08%, and Infosys down by 0.85% were the major losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite declined by 23.00 points or 1.02% to 2,232.60, Hang Seng shed 117.36 points or 0.51% to 22,836.36, KLSE Composite dipped 5.64 points or 0.32% to 1,766.76, Nikkei 225 decreased 29.34 points or 0.20% to 14,357.93, Straits Times slipped 2.12 points or 0.07% to 3,120.39, Seoul Composite decreased 9.51 points or 0.47% to 1,994.55 and Taiwan Weighted was down by 51.24 points or 0.62% to 8,174.12.

On the flip side, Jakarta Composite was up by 9.26 points or 0.21% to 4,365.87.