Benchmarks edge lower in late morning

Benchmarks continued to trade in the red zone dragged down by financial heavyweights over fears of a rate hike after retail inflation figure for November spiked to all-time high levels. Sentiments remained dampened as the rupee was trading lower at 62.14/15 per dollar as against previous close of 61.81/82 per dollar. Some pessimism also came in after Reserve Bank of India (RBI) Governor Raghuram Rajan said inflation was higher than the central bank's comfort zone, while growth was weaker than estimated and vowed to calibrate policy carefully. On the global front, the US markets remained under pressure on concern of Fed scaling back its stimulus program in the near future after a report showed slightly stronger than expected retail sales growth in the month of November, also shrugging the report of a sharp jump in weekly jobless claims. However, Asian equity benchmarks, after a sluggish opening, pared their gains to enter into green terrain.

Back home, traders were buying, Auto, Teck and IT while selling was seen in Bankex, Capital Goods and Power on the BSE. The market breadth on BSE remains negative with advances to declines in the ratio of 797:842. BSE Sensex and NSE Nifty were comfortably trading near their psychological 20,700 and 6,150 levels respectively. The BSE Sensex is currently trading at 20789.00 down by 136.61 points or 0.65% after trading in a range of 20867.17 and 20762.36. There were 7 stocks advancing against 23 declines on the index. The broader indices were trading mixed; the BSE Mid cap index was down by 0.26% and Small cap index gained 0.07%.

The top gaining sectoral indices on the BSE were, Auto up by 0.45%, Teck up by 0.07% and IT up by 0.04%, while Bankex down by 1.61%, Capital Goods down by 1.37%, Power down by 1.09%, Realty down by 0.75% and Oil & Gas down by 0.66% were the top losers on the sectoral index.

The top gainers on the Sensex were Tata Motors up by 2.55%, Coal India up by 1.53%, Wipro up by 1.27%, Bharti Airtel up by 0.90% and Dr Reddys Lab up by 0.68% .On the flip side, BHEL was down by 2.79%, ICICI Bank was down by 2.60%, HDFC was down by 1.87%, Bajaj Auto was down by 1.33%, and SSLT was down by 1.31% were the top losers on the Sensex.

Meanwhile, Soon after the release of nine month high retail inflation data and worse than expected October factory output data , the Reserve Bank of India (RBI) Governor Raghuram Rajan underscored that Indian economy was in weak position, with high inflation and that central bank will take overall view of macroeconomic data to carefully calibrate its monetary policy. Retail inflation, measured by the consumer price index (CPI) soared to a nine-month high of 11.24% in November, while the Index of Industrial Production (IIP) contracted 1.8% in October.

Adding further, Reghuram Rajan pointed that retail inflation at 11.24% was out of the RBI’s comfort zone and both monetary and fiscal policies were essential to tackle inflationary pressures. He cited supply side bottlenecks as a main reason for increasing inflation in the country.

While, referring to the fiscal deficit, the Governor averred that the government has laid down a road map that is expected to keep the fiscal situation within a target level at 4.8% of GDP for the current financial year. Aligning diesel prices with international rates would definitely control the fiscal deficit in the long run, but will exert downward pressure on inflation in short term, he added.

Furthermore, he cautioned that rising inflation in the country had become a concern for the RBI, which has been continually raising the policy rates over the past few months in order to trim the inflation.

The CNX Nifty is currently trading at 6,193.15 down by 43.90 points or 0.70% after trading in a range of 6,208.60 and 6,185.25. There were 10 stocks advancing against 40 stock declines on the index.

The top gainers of the Nifty were Tata Motors up by 2.65%, Coal India up by 1.62%, Wipro up by 1.27%, Bharti Airtel up by 0.83% and DR Reddy up by 0.76%. On the flip side, IndusInd Bank down by 2.98%, BHEL down by 2.79%, ICICI Bank down by 2.68%, BPCL down by 2.61% and Bank of Baroda down by 2.40% were the major losers on the index.

Most of the Asian equity indices were trading in green; Shanghai Composite rose 0.63 points or 0.03% to 2,203.42, Hang Seng strengthened 40.35 points or 0.17% to 23,258.47, KLSE Composite increased 8.87 points or 0.48% to 1,842.74, Nikkei 225 surged 156.32 points or 1.02% to 15,498.14, and Taiwan Weighted was up by 26.68 points or 0.32% to 8,388.01.

On the flip side, Straits Times down by 4.20 points or 0.15% to 3,054.07, Jakarta Composite declined 13.59 points or 0.32% to 4,198.63 and Seoul Composite was down by 7.60 points or 0.39% to 1,960.33.