Benchmarks continue to trade weak in late morning

Benchmarks were witnessing a lackluster session with negative bias in line with other global markets which were down following a sharp correction on the Wall Street. However, losses remained capped as some support came in with international credit rating agency, Fitch Ratings saying that Government efforts to achieve the fiscal deficit target of 4.8 percent of the GDP in 2013-14, are supportive for the country’s credit rating. Moreover, sentiments also got some support after the Consumer Price Inflation for December fell sharply to 9.87% compared with 11.16% in November on account of decline in vegetable prices. Food inflation decreased to 12.16% compared with 14.72 in November.

On the global front, most of the Asian equity indices were trading in the red at this point of time led by Japanese Nikkei, which tumbled over two percent as the yen hovered near a four-week high against the dollar after last week's surprisingly weak jobs report raised concerns about the U.S. growth outlook. Back home, traders were buying, Capital Goods, FMCG and Power while, selling was seen in IT, Teck and Realty on the BSE. Bank shares firmed up after on hopes that the sharp contraction in December consumer price inflation has made it easier for the Reserve Bank of India to maintain status quo on key policy rates. HDFC, HDFC Bank, ICICI Bank and SBI were up 0.2-0.5% each.

The market breadth on BSE remains positive with advances to declines in the ratio of 986:805. BSE Sensex and NSE Nifty were comfortably trading near their psychological 21,100 and 6,250 levels respectively. The BSE Sensex is currently trading at 21108.50 down by 25.71 points or 0.12% after trading in a range of 21154.76 and 21080.42. There were 11 stocks advancing against 19 declines on the index. The broader indices were trading in green; the BSE Mid cap index was up by 0.13% and Small cap index gained 0.41%.

The top gaining sectoral indices on the BSE were, Capital Goods up by 1.16%, FMCG up by 0.23%, Power up by 0.15%, Metal up by 0.15% and Consumer Durables up by 0.13%, while IT down by 0.84%, Teck down by 0.65%, Realty down by 0.36%, Auto down by 0.35% and Oil & Gas down by 0.17% were the top losers on the sectoral index. 

The top gainers on the Sensex were L&T up by 1.56%, Mahindra & Mahindra up by 0.96%, HDFC up by 0.75%, SSLT up by 0.74% and Coal India up by 0.60%. On the flip side, ONGC was down by 1.61%, Tata Motors was down by 1.60%, TCS was down by 1.44%, Wipro was down by 1.11% and Tata Steel was down by 0.95% were the top losers on the Sensex.

Meanwhile, Ahead of Reserve Bank’s quarterly policy review on January 28, Planning Commission Deputy Chairman Montek Singh Ahluwalia has asserted that containing inflation should not be the only target of central banks adding that central banks should have to look at multiple targets.

The RBI has been continually raising the policy rates over the past few months in order to restrain rising inflation. In recent mid-quarter monetary policy review on December, the RBI had kept key policy rates unchanged expecting that inflation would get moderated. Retail inflation eased to a three-month low level of 9.87% for December 2013 on point to point basis, as compared to record high level of 11.16% in November. Meanwhile, prevailing high interest rates and economic downturn have been exerting pressure on the domestic industries. India’s annual industrial output growth, measured by index of industrial production (IIP), contracted further by 2.1% in November on y-o-y basis as compared to 1.8% in October.

Referring to the country’s financial sector, Ahluwalia pitched for further liberalisation of the country's financial sector. Meanwhile, the RBI recently gave freedom to banks to open branches and is also in process of issuing new bank licences in the private sector. Recently, the central bank has also suggested the banks for setting up of specialised banks to cater to low income households to ensure that all citizens have bank accounts by 2016 adding that facility for withdrawal, payment and deposit should be set up within a 15-minutes walking distance anywhere in the country.

The CNX Nifty is currently trading at 6,266.40 down by 6.35 points or 0.10% after trading in a range of 6,280.35 and 6,258.85. There were 20 stocks advancing against 30 stock declines on the index.

The top gainers of the Nifty were L&T up by 1.52%, Cairn up by 1.47%, M&M up by 1.17%, JP Associate up by 0.84% and SSLT up by 0.82%. On the flip side, ONGC down by 1.84%, Tata Motors down by 1.56%  TCS down by 1.48%, HCL Tech down by 1.24% and  Ranbaxy down by 1.22% were the major losers on the index.

Most of the Asian equity indices were trading in red; Hang Seng declined 76.55 points or 0.33% to 22,850.88, Nikkei 225 tumbled 488.73 points or 3.07% to 15,423.21, Straits Times shed 12.49 points or 0.40% to 3,123.00, Seoul Composite decreased 4.87 points or 0.25% to 1,944.60 and Taiwan Weighted was down by 18.94 points or 0.22% to 8,547.02. On the flip side, Shanghai Composite rose 11.38 points or 0.57% to 2,020.94.