Markets continue to trade in narrow range with negative bias

Indian equity benchmarks continued to trade in an extremely narrow range with a negative bias in afternoon session amid selling witnessed in IT, Teck and Auto stocks. Weak global cues and depreciation in rupee value against the dollar weighed on the sentiments. Meanwhile, market losses remained capped as buying was witnessed in capital goods and healthcare stocks. Sentiments got some support as the Moody’s Analytic has noted that the worst is over for the India’s economy with GDP expansion likely to touch 5 to 5.5 percent this year and more than 6 percent in 2015. Capital Goods index was the top gainer among the sectoral indices up by over 2.16% on the BSE amid better than expected result of Larsen & Toubro for Q3 FY14. L&T stock was up around 3% to nearly Rs 1,035 as the company's margins witnessed expansion during the reported quarter post the demerger of its hydrocarbon business. On stock specific movement, L&T, Sun Pharma and Gail India were trading up by over 1.60%, while, M&M, ONGC and Wipro were trading down by over 1.50% on BSE. Bharti Airtel, extending its previous session's rally, was up by over 1% to around Rs 313 as the telecom major plans to sell its African tower business on country-wise.

Among other shares, Raymond surged over 3% to around Rs 310 after it reported an over four-fold jump in consolidated net profit at Rs 56.89 crore for Q3 FY14 on the back of growth across all businesses and margin expansion in key business segment. On the other hand, shares of KPIT Technologies slumped 12% to Rs 161 after sequential decline in consolidated revenue and net profit for the reported quarter.

On global front, Asian shares were trading in red with Shanghai Composite up by 0.41% and Nikkei 225 down by 0.79% after weak Chinese manufacturing data during January 2014. 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 negative, out of 2,259 stocks traded, 1,052 stocks advanced, while 1,069 stocks declined on the BSE.

The BSE Sensex is currently trading at 21,329.20 down by 8.47 points or 0.04% after trading in a range of 21,355.34 and 21,264.71. There were 14 stocks advancing against only 16 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.24%, while Small cap index up by 0.22%.

The gaining sectoral indices on the BSE were Capital Goods up by 2.16%, Healthcare up by 0.25%, Consumer Durables up by 0.21% and Power up by 0.12%. While, IT down by 0.85%, Teck down by 0.65%, Auto down by 0.44%, Oil and Gas down by 0.31% and FMCG down by 0.28% were the losing indices on BSE.  

The top gainers on the Sensex were L&T up by 3.14%, Sun Pharma up by 1.77%, Gail India up by 1.69%, Bharti Airtel up by 1.21% and BHEL up by 0.92%. On the flip side, M&M down by 2.19%, ONGC down by 1.52%, Wipro down by 1.50%, TCS down by 1.22% and Hindalco Inds down by 0.91%.

Meanwhile, the Moody’s Analytic, in its report titled 'India Outlook: Steady Growth, Lower Risk' has noted that the worst is over for the India’s economy with GDP expansion likely to touch 5 to 5.5 percent this year and more than 6 percent in 2015. Presenting a sanguine picture of India's economic outlook, the agency highlighted that the economy has stabilised in recent quarters and downside risks have receded as prospect of better government after the May general elections have boosted business and investor confidence and will be the trigger for the economy. However, Indian economy will slowly improve across 2014 but not hit its potential until 2015, it added. In the previous fiscal, India's economy slowed to a decade low of 5 percent owing to the global slowdown and domestic factors, like high interest rates.

Further, the agency report added that the upturn in growth rate will be led initially by exports, which started to lift from mid-2013, and then later in 2014, by an upturn in the investment cycle. The most notable improvement on the country’s external front over the past few months helped to contain the current account deficit (CAD) at $5.2 billion, or 1.2% of GDP in Q2 FY14 as against the 4.9% of GDP in the Q1 FY14. Referring to domestic currency, Moody’s Analytic has noted that the rupee, which was one of the worst performers among Asian currencies last year, is now less exposed to external worries like the US Fed tapering with the CAD being brought under control. However, it cautioned that such a low CAD may not be sustainable amid probability of further increase of country’s gold imports.

On inflation front, the agency noted that lower inflation will help to lift business confidence and limit downside currency risk. It expect that wholesale price inflation to continue to fall through the first half of 2014 as food inflation eases with better crop yields. WPI inflation eased to five month low at 6.16% in the month of December on y-o-y basis as against 14-month high of 7.52% in November.

The CNX Nifty is currently trading at 6,335.65 down by 3.30 points or 0.05% after trading in a range of 6,342.90 and 6,316.40. There were 24 stocks advancing against 26 declining on the index.

The top gainers of the Nifty were L&T up by 3.03%, Jindal Steel up by 2.45%, Gail up by 1.82%, Cairn up by 1.49% and Sun Pharma up by 1.26%. On the flip side, HCL Tech down by 2.81%, M&M down by 2.43%, ONGC down by 1.67%, Wipro down by 1.21% and Bajaj Auto down by 1.11% were the major losers on the index.

The Asian equity indices were trading in red; Seoul Composite down by 0.16%, Shanghai Composite down by 0.41%, Nikkei 225 down by 0.79%, Hang Seng down by 1.39%, Taiwan Weighted down by 0.35%, Straits Times down by 0.90%  and KLSE Composite down by 0.19%. While, Jakarta Composite up by 0.15%.