Benchmarks continue flat trade in afternoon session amid volatility

Indian equity benchmarks continued to trade flat near the neutral line amid volatility in afternoon session. Investors’ sentiments remained down as World Bank lowered India’s economic growth forecast to 4.7 percent for the current fiscal from 6.1 percent growth projected earlier. Selling was witnessed in capital goods, banking and IT stocks, however, market losses remained capped as buying was witnessed in oil and gas, FMCG and consumer durables stocks as investors sentiments got a support after Planning Commission estimated that India’s CAD would be around 2.5 percent of GDP in current fiscal. On stock specific movement, IT shares such as TCS and Infosys were trading lower on the bourses on profit bookings after reporting strong September quarter earnings.

On the global front, Asian markets were trading in green with Japanese index Nikki up by 0.83% as global risk appetite remains firm as US Senate leaders announced a deal to prevent the United States from defaulting on its debt and end the government shutdown. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,000 and 20,500 levels respectively. The market breadth on BSE was positive, out of 2,028 stocks traded, 1,108 stocks advanced, while 812 stocks declined on the BSE.     

The BSE Sensex is currently trading at 20,558.27 up by 10.65 points or 0.05% after trading in a range of 20,629.80 and 20,471.25. There were only 18 stocks advancing against 12 declines on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.56%, while Small cap index up by 0.45%.

The gaining sectoral indices on the BSE were Oil and Gas up by 1.66%, FMCG up by 1.42%, Consumer Durables up by 0.81%, PSU up by 0.62% and Power up by 0.51%. While, Capital Goods down by 1.22%, IT down by1.14%, Teck down by 0.68%, Bankex down by 0.57% and Auto down by 0.46% were remained the only losing indices on BSE.

The top gainers on the Sensex were ONGC up by 2.69%, Bajaj Auto up by 2.39%, Bharti Airtel up by 1.99%, Hero Moto Corp up by 1.54% and ITC up by 1.49%. On the flip side, Tata Motors down by 3.44%, TCS down by 2.67%, L&T down by 2.12%, SBI down by 0.91% and ICICI Bank down by 0.84% were the only losers on the Sensex.

Meanwhile, amid rising concerns over the prevailing economic downturn, the World Bank has lowered India’s economic growth forecast to 4.7 percent for the current fiscal from 6.1 percent growth projected earlier.  The World Bank in its report ‘India Development Update’ has said that negative business sentiment coupled with rising inflation and higher interest rates could adversely impact the economy’s growth in the current fiscal.

By adding further, World Bank said that India's growth potential remains strong, but its macroeconomic vulnerabilities such as an elevated current account deficit (CAD), rising pressure on fiscal balances, rupee depreciation and high headline inflation could impact the speed of economic recovery. Therefore, there is a need for prudent macroeconomic policies and continued reforms in order to set strong foundations for accelerated growth.  At present, Indian economy is struggling with slowdown and its growth has slowed down to four year low at 4.4 percent in April-June quarter, 2013.

Regarding the growth in second quarter in current fiscal, it added that tighten liquidity and negative consumers sentiments are likely to curb the potential for recovery in the Q2 FY14 even after manufacturing output rebounded in July. Meanwhile, growth is expected to rebound strongly in the second half of current fiscal on the back of declining core inflation, strong agriculture growth on the back of better than expected monsoon and rising domestic exports. Referring to medium term outlook, the World Bank states that growth is expected to accelerate to 6.2 percent by 2014-15 as strengthening exports support a recovery in industrial activity and new investment projects come on stream. The World Bank further added that pressure on inflation is likely to moderate and cut its projection for wholesale price index (WPI) inflation to 5.3 percent for the current financial year as against 6.7 percent projected earlier.

The CNX Nifty is currently trading at 6,086.95 down by 2.10 points or 0.03% after trading in a range of 6,110.75 and 6,064.85. There were 32 stocks advancing against 18 declines on the index.

The top gainers of the Nifty were JP Associate up by 5.87%, ONGC up by 2.73%, Cairn up by 2.49%, Bajaj Auto up by 2.32% and Ranbaxy up by 2.12%. On the flip side, Tata Motors down by 3.39%, Indusind Bank down by 2.74%, TCS down by 2.56%, L&T down by 2.32% and HCL Tech down by 2.04% were the major losers on the index.

The Asian equity indices were trading in Green; Jakarta Composite up by 0.49%, Taiwan Weighted up by 0.51%, Seoul Composite up by 0.29%. Nikki 225 up by 0.83%, KLSE Composite up by 0.37% and Straits Times up by 0.79%. While, Shanghai Composite down by 0.17% and Hang Seng down by 0.07%