Benchmarks continue to trade in narrow range with positive bias

Indian equity benchmarks pared all early losses and were trading in a narrow range with a positive bias in afternoon session amid buying witnessed in frontline blue chip stocks such as Bharti Airtel, NTPC and Cipla among others. Shares of private banking majors such as ICICI Bank, HDFC Bank and Axis Bank were up by 0.5-1% each on expectations that the RBI would continue to maintain status quo on key policy rates at its meeting scheduled on January 28. Meanwhile, markets gains remained capped amid selling witnessed in FMCG and capital goods stocks as sentiments were subdued as the International Monetary Fund (IMF) noted that Indian economy is likely to grow at 4.6 percent in current financial year, which was lower than government projection at around 5 percent. On stock specific movement, Bharti Airtel, Cipla and NTPC were trading up by over 1.50%, while, ITC, Hindustan Unilever and Hero Motocorp were trading down by over 0.60% on BSE. Bharti Airtel was up by nearly 2% to around Rs 310 amid reports that the telecom major is in plans to sell its African tower business country-wise.

Among other shares, Tilaknagar Industries was up over 3% at Rs 55 as Kishore Chhabria-led Allied Blenders and Distillers (ABD) is looking to acquire majority stake in the company. Finolex Cables' shares were up around 3.5% at Rs 87 after the company announced that it has received an order for optical fibre cable. On the other hand, shares of Thermax were trading nearly 2% lower at Rs 653 after the Pune based industrial energy solutions company reported a decline in net profit for Q3 FY14.

On global front, Asian shares were trading mixed with Shanghai Composite up by 1.77% and KLSE Composite down by 0.22%. Back home, the NSE Nifty and BSE Sensex were trading above their psychological 6,300 and 21,000 levels respectively. The market breadth on BSE was positive, out of 2,199 stocks traded, 1,120 stocks advanced, while 950 stocks declined on the BSE.

The BSE Sensex is currently trading at 21,285.43 up by 34.31 points or 0.16% after trading in a range of 21,300.90 and 21,168.43. There were 20 stocks advancing against only 10 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.40%, while Small cap index up by 0.34%.

The gaining sectoral indices on the BSE were Healthcare up by 0.91%, Metal up by 0.74%, Power up by 0.56%, Realty up by 0.33% and Auto up by 0.32%. While, FMCG down by 1.00% and Capital Goods down by 0.12% were the losing indices on BSE.  

The top gainers on the Sensex were Bharti Airtel up by 1.82%, Cipla up by 1.74%, NTPC up by 1.57%, Hindalco Inds up by 1.42% and Tata Steel up by 1.34%. On the flip side, ITC down by 1.64%, Hindustan Unilever down by 1.17%, Hero Motocorp down by 0.61%, SBI down by 0.55% and ONGC down by 0.51%.

Meanwhile, with an aim to strengthen the current monetary policy framework, the Reserve Bank of India (RBI) Expert Panel, headed by RBI Deputy Governor Urjit R Patel, has recommended the central bank to adopt the new Consumer Price Index (CPI) for anchoring the monetary policy. At present, the RBI determines its monetary policy stance on the basis of Wholesale Price Index (WPI) as it is the only measure of prices at a national level, as the CPI has traditionally addressed prices facing specific sections of the society.

The committee has emphasized that bringing down CPI inflation must be accorded primacy and set the inflation target at 4 percent with a band of plus or minus 2 percent around it. The RBI Panel suggested that the central bank should take measures to bring down the CPI inflation from the current level of 10 percent to 8 percent over a period of next 12 months and to 6 percent in the next 24 months, before formally adopting the recommended target of 4 percent inflation with a band of +/- 2 percent. The monetary policy decision making should be vested in a monetary policy committee (MPC) that should be headed by the Governor, it added. Further, the panel added that MPC will be accountable for failure to establish and achieve the set CPI inflation target, which will require the MPC to issue a public statement, signed by each member, stating the reason for failure, remedial actions proposed and the likely period of time over which inflation will return to the centre of the inflation target zone. Meanwhile, CPI inflation eased to a three-month low level of 9.87% for December 2013 on y-o-y basis as compared to record high level of 11.16% for the previous month of November 2013.

Referring to the price stability in the country, the panel has highlighted that the government should make efforts for achieving price stability as it affects the monetary policy transmission. The RBI panel also recommended some new instruments to be added to the tool kit of monetary policy adding that all fixed income financial products should be treated on par with bank deposits for the purposes of taxation and TDS. In order to make monetary policy framework more transparent and predictable, RBI Governor Raghuram Rajan had set up the panel in September. The main aim of the panel was to recommend what needs to be done to revise and strengthen the RBI monetary policy framework.

The CNX Nifty is currently trading at 6,322.40 up by 8.60 points or 0.14% after trading in a range of 6,326.70 and 6,287.45. There were 27 stocks advancing against 23 declining on the index.

The top gainers of the Nifty were Lupin up by 2.67%, Cipla up by 1.93%, Bharti Airtel up by 1.84%, NTPC up by 1.61% and Hindalco Inds up by 1.50%. On the flip side, Asian Paints down by 2.24%, ITC down by 1.67%, Ultratech Cement down by 1.50%, Hindustan Unilever down by 1.13% and Grasim down by 1.12% were the major losers on the index.

The Asian equity indices were trading mixed; Seoul Composite up by 0. 11%, Shanghai Composite up by 1.77%, , Nikkei 225 up by 0.22%, Hang Seng up by 0.21% and Taiwan Weighted up by 0.30%. While, Jakarta Composite down by 0.12%, Straits Times down by 0.04%  and KLSE Composite down by 0.22%.