Barometer gauges languish near day’s low amidst sustained selling pressure

Amidst fresh bout of selling pressure, Indian equity markets are now languishing near day’s lowest point, with a cut of around 3/4th of a percent, below the crucial 20,800 (Sensex) and 6,200 (Nifty) levels respectively. Sliding for the fourth straight session, benchmark equity indices right from the start of trade were trading downbeat on account of murky set of macro-economic data, which fuelled expectations that RBI would hike key interest rate by 25 basis points in upcoming monetary policy meet on December 18. On the macro-front, November Retail inflation jumped to nine-month high level at 11.24%, October IIP shrinking for the first time in four months, contracted by 1.8%. Additionally, sentiments also a took hit on speculation that the US Federal Reserve may scale back its stimulus as early next week. Despite this, Asian shares were trading mixed, with Japanese stocks drawing some comfort from a reversal in the yen which slid to a seven-month trough on the dollar.

Closer home, amidst the wide-based selling pressure, only stocks from Technology and Information Technology managed to gain some traction on account of Indian currency, which prolonging its depreciating streak, slipped past the perilous ‘62/$’. Sectorally, Banking, Capital Goods and Power counters were the top laggards of the session. Banking stocks tanked on the expectation that RBI would yet again hike rates in upcoming monetary policy. On the flip side, fertilizer stocks were on investors’ radar after Cabinet Committee on Economic Affairs (CCEA) has approved an Rs 4,800 crore subsidy for the sector.

The market breadth on BSE was negative, out of 2241 stocks traded, 771 stocks advanced, while 1324 stocks declined on the BSE. The BSE Sensex is currently trading at 20765.30 down by 160.31 points or 0.77% after trading in a range of 20867.17 and 20744.78. There were only 6 stocks advancing against only 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.64%, while Small cap index down by 0.37%.

The gaining sectoral indices on the BSE were Teck up by 0.05% and IT up by 0.03%. While, Bankex down by 1.88%, Capital Goods down by 1.70%, Power down by 1.51%, Realty down by 1.01% and Consumer Durables down by 0.96% were the losing indices on BSE.

The top gainers on the Sensex were Coal India up by 2.13%, Tata Motors up by 2.05%, Wipro up by 1.33%, Bharti Airtel up by 1.14% and Dr Reddy’s Lab up by 0.46%. On the flip side, BHEL down by 3.35%, ICICI Bank down by 3.33%, Gail India down by 2.47%, Hindalco Industries down by 1.98% and Bajaj Auto down by 1.96%.

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 6,184.85 down by 52.20 points or 0.84% after trading in a range of 6,208.60 and 6,177.15. There were 10 stocks advancing against 40 declining on the index.

The top gainers of the Nifty were Coal India up by 2.31%, Tata Motors up by 2.26%, Wipro up by 1.42%, Bharti Airtel up by 1.13% and Dr Reddys Lab up by 0.40%. On the flip side, JP Associate down by 3.69%, Indisind Bank down by 3.34%, BHEL down by 3.26%, ICICI Bank down by 3.23% and IDFC down by 3.03% were the major losers on the index.

The Asian equity indices were trading mixed; Hang Seng up by 0.01%, Nikkei 225 up by 0.40%, Taiwan Weighted up by 0.19% and KLSE Composite up by 0.34%. While, Seoul Composite down by 0.26%, Straits Times down by 0.01%, Jakarta Composite down by 0.52% and Shanghai Composite down by 0.31%.